 | Has Fossil Fuel Consumption Within the EU Peaked? | The Oil Drum | Conspiracy or Stupidity: The Trouble With Numbers |  |
Asking one of the less comfortable questions about our energy future...
Posted by Heading Out on July 10, 2008 - 10:00am
| In my last post I talked a little about the media’s normal pre-disposition to ask relatively comfortable questions about the state of oil (and natural gas) supply, with the consequence that some of the more difficult questions and those with more painful answers don’t get asked very often. The painful questions take one beyond the current concerns on the ability of supply to match demand at a reasonable price, to the point where oil production can longer increase in absolute volume, and then on to the point where overall production starts to decline. It is an issue that Euan and the TOD Europe group are beginning to ably document, as they outline the problems that Europe will face. It is a point that is illustrated in the recent post on the Megaproject update by Khebab, and more specifically in the comments on that post. But what I would add to that, and ask, as a painful question, is as to whether the projection is overly optimistic. |
Ken Deffeyes, who did so much to bring this current situation to our attention with his writing and books, who has said that he is no longer a prophet, but has become a historian. His remark implies that the much of the debate over peak oil is perhaps over. And there I would disagree with him, because I remain critically concerned, as Euan is, that the world does not really understand the size of the problem that is approaching, and the speed of that arrival. Further the information that controls the shape of the production curve, post peak is usually derived relating to the pattern of the peak in the United States. To anticipate that the world curve will look the same, overlooks the critical difference that, at the present time, there is no satisfactory alternative fuel to satisfy demand. Thus the market imperatives to extract more oil in the immediate short term to meet needs may over-ride more rational concerns about achieving maximum ultimate recovery by producing the oil more slowly. This is a different situation than that which held over the time that the American production plot was developed, and alternate supplies of oil were available from abroad.
One of the significant concerns relates to the rate at which production decreases in mature fields. The average value has been assumed to lie at around 4 – 4.5%, and it is initially disquieting to note the comment that the Wall Street Journal recently quoted from the IEA.
Project delays averaging 12 months, coupled with global average decline of 5.2% - up from 4% last year – are the factors behind these revisions. Over 3.5 mb/d of new production will be needed each year just to hold global production steady. “Our findings highlight again the need for sustained, and indeed, increased investment both upstream and downstream — to assure that the market is adequately supplied,” stated [IEA Executive Director Nabuo] Tanaka.
The acceleration in the decline rate is likely to continue as more horizontal wells become the norm in oil fields and as these become spent and drop out of production.
To explain why this is one should understand the difference between the behavior of vertical and horizontal well production, particularly in the way that they behave as the oil in the reservoir declines under the driving waterfloods that push oil to the well and how they interact with the well. With a vertical well the water level rises slowly in the well, reducing the overall extraction length, but making that change slowly, over time. (Oil production is a function of the length of well exposure, among other things). With the horizontal well production remains relatively stable, until water reaches the horizon where the wells have been located, and then the entire well can become flooded, with an immediate and rapid drop in production.
In fields where these wells dominate, production declines of 10 – 14% have been observed, and, as horizontal wells become more common, it is towards that value that decline rates are heading in the future. These decline rates are not used in the conventional models that look at what the oil supply situation will look like over the next few years. Discussions that I have had, informally, with several people that talk about the peak oil situation have found them somewhat defensive about using the lower values of around 4.5%. It is as though, having grasped the nettle required to face the reality that oil production is peaking, that they then hesitate to look at the abyss that higher decline rates are going to bring.
That decline rates will increase is not itself news, Andrew Gould of Schlumberger was talking of 8% declines as long ago as 2005.
Secondly, the industry is dealing with a phenomenon that is exaggerated by the lack of investment over the past 18 years. This phenomenon is the decline rate for the older reservoirs that form the backbone of the world’s oil production, both in and out of OPEC. An accurate average decline rate is hard to estimate, but an overall figure of 8% is not an unreasonable assumption. The maintenance required to slow the rate of decline, and increase the overall recovery, is a key element of the supply picture going forward.
While I don’t think he was alluding in any way to the increasing use of horizontal wells, his number, and his position giving him more than most the sense of accuracy of the number is a recognition of the change to come.
Unfortunately, as the example of Cantarell is demonstrating when production starts to drop at around 14% it does not take long for the entire export situation for a country to markedly change, which in turn will have a significant effect on those that import that oil. And yet while individual fields such as Cantarell, Yibal, and the North Sea have shown these higher decline rates are not uncommon, their impact on total world production declines has not been widely remarked. Stuart and Khebab wrote about this in complimentary pieces last November, in analyses more detailed than this. I don’t agree with some of their conclusions, but do believe that this is a critical question that requires some more detailed consideration than it is currently getting,
The evidence seems to be pointing to an overall increase in the global decline rate for existing wells. What this means is that, if world production is around 86 million barrels a day, then to replace existing declines next year, an additional new production of 4.47 mbd at 5.2% decline, instead of the 3.87 mbd required at 4.5% decline, will be needed just to stabilize supply at a fixed level. If the rate is accelerating this difference of 600,000 bd will increase and drop the top line of the curves such as those that Khebab and others have so carefully assembled.
This increased decline rate is already being reported, and thus the potential peak in 2010 that the graph shows is already at risk and we may struggle to get much above the numbers that we are at today. Bear in mind that decline rates are cumulative over the years, and that outyear production must be that much greater to sustain supply, relative to today’s production.
At present there is still considerable complacency about how the oil supply situation will play out. There is an implication that this is just a difficult period to get through, and that, in a relatively short time the situation will get better. Sadly I would suggest that even our current thinking here is largely overly optimistic, and that instead it is going to be much more difficult, faster than we expect. But also, in light of peoples’ expectations about oil really being there at a reasonable price, the greater the dangers of civil unrest, as it occurs without proper public education as to the reason that “there is no more” signs start to spring up at gas stations.
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Great Article.
Please keep it up.
Excellent subject, HO, I'm glad you brought it up. I'm posting this upthread since very little of the discussion below was actually about the media's failure to ask tough questions. Here are three articles for your consideration:
The Speculation Explanation: Framing the Energy Crisis - AlterNet, June 28
If you scroll about halfway down, past the **** separator, he gets into a smart discussion about framing (referencing George Lakoff's work, of which I am a huge fan) and how the media has deliberately used the speculation frame to deflect attention away from the real problems with energy.
Faustian economics: Hell hath no limits - By Wendell Berry - Harper's Magazine, May 2008
A typically excellent essay from Berry on the "doctrine of limitlessness."
Peak Oil Confusion - A Game Whose Time Is Up
My new article, which takes Investor's Business Daily to task for its truly awful May editorial on peak oil, in which I assert that they are deliberately distorting the issue.
thanks for the plug - sorry u didn't like the first half
ExxonMobil put the decline rate from existing wells at between 4% and 6% per annum. If we take the higher end number, which is below what some sources have cited, and look the EIA 2005 annual total liquids rate of 85 mbpd, we need about 5 mbpd of new total liquids production every year, to maintain constant production. So, from 2005 to 2015, we would have needed to add 50 mbpd of new production, or the equivalent of about 10 Ghawar Fields, based on production in recent years.
Of course, I think that the key driver is the ongoing, and accelerating decline rate in net oil exports.
And how is the weather today?;-)
Cloudy--with a chance of declining net oil exports.
Hi WT,
Would you expect the decline rate to be a steady number say 6% = 5mbpd every year or would it be 6% of the reduced figure? e.g. in the second year would you expect to see 79 - 5 (6% of 85) or 79 - 6% of 79?
If we were able to maintain flat production, we would need to add about 5 mbpd every year, assuming a 6% gross decline rate, but the point is, IMO, that Peak Oil is basically the story of the rise and fall of the big oil fields, and once the big fields start declining, we can't offset the big field declines with new smaller fields, which is what the Texas & North Sea case histories show:
http://www.theoildrum.com/files/TexasAndNorthSea.png
Matt Simmons defines the gross decline rate as the decline rate from existing wells and the net decline rate as the decline after new wells are put on line. Basically, with stable or growing production from the big fields, we tend to have increasing production. When the big fields roll over, we tend to have a net decline rate. Texas has shown a long term net decline rate of -4%/year, while the North Sea has shown -4.5%/year.
Simmons has "The Oil Pyramid" chart in Twilight (Appendix B) showing that of about 4100 significant fields, the 14 largest put out 20% of our oil. I don't know what percent of these old elephant fields have had horizontal well production, but if they all have the 10% variety of sudden decline, this forces all the rest of the fields, over 4000 of them, to increase production 2.5% each year just to offset the 14 big fields' decline rate after water flood of the horizontal wells. That's a non-14-big-field global production increase of 2.5% each year just to keep production flat and falling behind demand.
Westexas wrote:
Small point but it is in fact an error to apply an estimated decline rate to "all liquids". Instead, it refers narrowly to conventional crude oil.
And that's the way it's used in reports from the IEA, for instance. The reason behind this is that oil sands, natural gas plant liquids production, biofuels etc. have very different output constraints from conventional crude.
For example see page 23:
http://www.iea.org/textbase/speech/2008/eagles_mtomr2008.pdf
And natural gas plants get their gas from what source? ExxonMobil was talking about a 4% to 6% decline rate in oil and gas wells worldwide. So, it would be more accurate to say that is is the production decline from conventional wellbores worldwide. But unconventional production is not exactly setting the world on fire right now. Last year, both Venezuela and Canada showed declining net oil exports.
When I mention peak oil, most people reply that it is overstated, and that they will just stay at home more.
They think oil only effects how much they drive.
How can we bring more awareness to the true impacts?
People think that it is a scare tactic, and do not understand what is really going to happen.
Write lots of Letters to the Editor in your local paper. Run for office on the issue. I did both, and now the paper has me on as an ongoing columnist for "Energy & Ecology"
Call your local representatives and ask them to send someone to the ASPO conference. People never talk your word for something that they don't want to hear. They have to go through the process themselves.
One of the problems is that Environmentalists have cried WOLF way to often and the public is naturally sceptical of another 'the Sky is Falling' scenerio. They won't believe peak oil is real until a chunk of sky takes out their house.
They don't know how to create a need.
Environmentalists seem exclusively focussed on climate change's impact on other species [ie saving the polar bear] or impact on foreigners [Pacific climate refugees] or impact on future people [by 2050 or 2100]. Which is too bad for them. They could have rallied a LOT more Americans to their cause by mentioning peak oil too: "oh by the way, since your food is no longer going to come in a wrapped package from out of state and there's not enough local food to go around...got a fishing rod? Oh that's right the remaining fish [outside the dead zones] have cancer.... Got orchards? Oh that's right they've been sold it off to developers....Got some good soil under your lawn? Oh that's right it was replaced with clay and chemicals.... Got back up water supply? Oh that's right it has all been going down the sewers.
...Well, don't you think we should make some changes around here so you won't starve whenever the trucks stop pulling up to the Safeway?"
they would have thought the environmentalists were even more delusional if they heard that.
that's simply not true. some recent developments in the suburbs may have that problem but not all. anyway where did the soil go? it went to the store. you can just buy soil. you can compost.
Vacant Lot Becomes a Garden
http://www.treehugger.com/files/2008/07/vacant-lot-becomes-garden.php
I am in the business of converting vacant lots to gardens.
Thank goodness we do have soil sources in stores right now and we have time to learn how to compost right now. When TSHTF, it will be much harder: You won't be able to just buy soil at a store.
There is a phenomena called PEAK SOIL, a result of irresponsible treatment of our soil resources on both farms and in residential areas. You could learn from studying the concept. [But as we all know from your prior posts, you are not here to learn, you are here just to argue for Business As Usual.]
1. peak soil? ok...did hubbert model that?
2. I have never ever in my life argued for BAU. not even close. BAU is ever increasing SUV sales when I've said we're moving to electric cars, conservation and et. electric cars are not BAU.
Perhaps you can go to the store and buy some 'thinking out of the box' in a box.
Speaking of "In the Box" thinking.
Infinite growth is impossible, but that does not mean that infinite collapse is inevitable. Try a bit of out of the box thinking yourself. Fossil Fuels enable BAU, but there's a whole lot of unusual ways to do business.
Come up with one new idea to do something you depend on with no FF input. Or dig up an old way to do it. Not every improvement in technology since 1850 requires oil, coal, or natural gas. That's 150 years of new ideas.
Crying Wolf - Wrong analogy.
If you remember the story, the child LIED to get attention.
Peak Oil, Climate Disruption, Species Annihilation, Acid Rain and Oceans, Ozone depletion, Pollution and Poison are not lies. Some of these topics have long lead times that present focused individuals have denied these problems and their consequences. As a rhetorical tactic they respond by citing the story of the "Boy who cried wolf". The truth is that the wolf really was there, but it was off on another hill and each time the boy cried, the wolf was closer.
Now the wolf is about to eat the sheep and the child.
Do you have a link for that?
The media, Congress, the presidential candidates are currently working themselves into a frenzy over oil speculators and the regulation of commodity markets. The public's attention is constantly being diverted to the wrong set of problems (speculators! those OPEC bastards! Iran!) and the wrong set of solutions (corn-based ethanol! gas tax holiday!).
Beyond that, how are people in general supposed to prioritize an impending oil supply crisis against a fairly stark set of current, immediate and more salient problems, like the bear market, job losses, stagnating income and the housing downturn. It's the "that sounds awful, but I don't have health insurance for my kids and my house is worth less than the two mortgages on it and I have $25,000 in credit card debt" syndrome.
It's not the case that we're facing a looming crisis. We're in the middle of a mounting globally scaled economic crisis with a myriad of intersecting causes and effects, of which energy is but one part.
Agreed. People are too absorbed with their own personal crises to see that we're facing an over-arching crisis that we all need to tackle together. Namely, that the underlying economic and political systems we've become accustomed to are falling apart in the face of peak oil and global resource limits.
There's also a religious belief in the "power of the market" - namely that the price of energy will rise and that new technological solutions (some named and some yet-to-be-named) will step in and the supply side of the equation will be solved. And the 'life of the world may move forward into broad, sunlit uplands' in our electric cars.
I have a simple challenge to the Friedman-esque faithful that we give the markets 'six months' to figure it all out for us : "Did the 'market' put a man on the moon? Did the 'market' defeat Hitler and Tojo's Japan?"
believing in the markets is like believing in gravity and science. if you don't believe in markets it's akin to being a climate change denier or that the earth is at the center of the universe.
I read the Prius news today and the market is literally moving away from the Highlander SUV and towards the Prius because of high pas prices. the markets are working. gasoline demand is at a 5 year low.
John, I would posit that the move to the Prius is an incremental change that market forces can provide, so we up the average mileage on the American road from 15 to 35. Ok that buys a few more years..... then what? The transportation and energy production and consumption markets have to be fundamentally changed to resolve PO.
Maybe an example illustrates the power and also the limitation of the market. In 1939, if you wnated to get anywhere in the US, you used a train. Your car was a short range vehicle foe the most part, the roads, such as there were were spokes out from major population centres served by rail.
Then along came WW2 and Eisenhower's highway program. The transportation market was turned on it's head: all of sudden there were lots of cars and trucks being made cheaper than ever and more importantly roads to drive them on, great roads that could cross the country. The passenger train was done. Was that the market that did that? Or was that two major forces that accidentally or deliberately changed the market?
I heard on tv that for every mile increase in fleet MPG in the US it's like finding a well that produces 300,000 barrel per day. a Prius uses half as much gas as the Highlander so that is very good news. the Prius is just the beginning. then it's a plug-in prius. then it's a PHEV Prius with solar panels. then it's an all-electric Prius and so on. don't forget we don't need technological innovations like the Prius, we can always just drive less and walk more. there is always car pooling.
We could probably back calculate that.
US uses 22 MBPD and 60% of that goes to transportation let's say.
Average mileage of the fleet is 20 MPG let's say, so 1 MPG increase pulls back 5% of that 22 MBPD.
That's going to be nearer 600,000, John, unless I messed up somewhere. Anyone given this more thought?
Don't feed the trolls
What troll, where?
John and I are debating the finer question of whether or not the market can solve the transportation/cheap energy crisis, caused by PO. John is batting for the market and I'm batting for a New Apollo Project. My thesis, and here's your rebuttal John, is that (1) the market by itself can't change the game, government or some force majeure has to reset the market conditions fundamentally. To get out of PO hock, the road to status-quo for transportation with new energy sources is paved with a massive investment in solar and electrical energy generation. Question is: how do we build the power plants to supply the electricity, and how do we build the plants to make the solar panels - what source of energy will we use to do that? It's an effort that requires the effort of the whole nation: hence the statement 'The market didn't put a man on the moon'.
did we need to go to the moon? a better question should be why didn't the market build the Erie Canal or the Transcontinental Railroad?
The market is reactive, not proactive. With crude oil reaching into nearly every aspect of our modern lifestyles, the scope of the problem is overwhelming. We need proactive policies to deal with peak oil to soften the blow. The world is still driving peddle to the metal over the falling edge of peak oil. We appear to have waited too long.
The market is working like a myopic dinosaur ravaging his food supply. People stuck with gas guzzlers are having difficulty selling them and have to accept an economic loss to dispose of them. The Prius, a parallel hybrid, is about fuel efficiency which some find desirable now due to high liquid fuel prices. No one will want a Prius, it will have no resale value depleting their owner's assets again, when fuel shortages arrive. Waiting in long lines at the gas station to finally arrive at an empty fuel pump preventing the use of the vehicle will drive the demand away from fuel efficiency to different fuels. The technologies within reach today are battery powered cars and for range extension, plug-in series hybrids for those who can afford them. Even plug-in series hybrids may only serve as transitional vehicles to something else, such as hydrogen powered vehicles or mass transit.
The plug in Prius will be able to do about 10 miles on electric.
So it could go to work for a round trip of 20 miles if recharged there.
This would cover the needs of more than 50% of Americans and the rest would just have to reduce their demands.
It would cover most of the needs of far more of the rest of the world.
The premium would be about $4k on a similar conventional car, and Toyota hope to get that down to $2k
The problem is building enough of them quickly enough to make a big difference, but they should help a lot for emergency service vehicles and so on.
EV bikes and trikes will have to do for everyone else.
The cost to convert a Prius to a plug in is currently $10,000 and that is on top of the premium one is already paying for the Prius. Now, if and when Toyota starts mass producing plug ins, the price will no doubt come down, but I don't think we have any numbers yet.
That is conversion costs, not just battery- they will likely have to fool around with quite a few other things to get it to work - the Prius being a parallel hybrid rather than a series hybrid has a complex management system.
This is also the 123 battery if you are talking about the hymotion, which is around $1500/kwh so that would work out at around $6,000 for a 4kwh pack, which should be around the size needed for the specs they give:
http://www.a123systems.com/hymotion
Hymotion :: Enabling the new generation of hybrid owners to maximize their fuel efficiency
Toyota will only need to engineer the car once, not suss out a way of adapting someone else's system.
The specs that are around indicate a 10 mile electric range, which is about 4kwh.
The cost of the lithium batteries is around $1,000kwh currently.
Toyota has said as far as I can recall that they hope to bring that down to around $500/kwh with mass production.
This compares with a likely additional cost compared to an equivalent ICE car of around $16,000 for the 16kwh, 40 mile range of the Volt.
A 10m mile range to work, charging up there, and back again would cover the needs of over half of Americans, so to me Toyota seem to have got the specs right, and GM to have screwed up by over-speccing.
the Prius is listed online though for less than $25,000. that's a lot less than something like an Escalade or a HIghlander. a hybrid is just another option same as a sun roof but the difference is it pays itself back.
and just where is all the electricity going to come from when people switch from heating their homes with oil and nat. gas to electricity?
Wind doesn't always blow, sun doesn't always shine, and rain doesn't alway fill reservoirs. Fossil fuels are unique in it's 24/7 energy availability.
What we are headed for is worse than e-cars will help with.
Buy a bike while you still can.
Fossil fuels are not unique in their ability to provide 24/7 power.
Both geothermal and nuclear energy also share this characteristic.
Vast amounts of energy are currently wasted - the installation of air-source heat pumps alone can increase efficiency of home heating in existing builds by around 2.5 times.
EV cars can't be turned out in time to have mass effect, so you suggestion of buying bike, peddle or electric, is a sensible one.
Or the ever popular answer to "What do I drive to save money on gas?":
Less.
Combine trips, cut unnecessary trips out completely. Walk or bike if it's close.
Said by DaveMart:
The infrastructure, electrical sockets and meters, is not in place to recharge vehicles at work or in retail parking lots. Recharging during the day means high demand during peak, so the chargers will use timers or stop charging if they detect a low voltage on the grid. Hopefully we will not do something stupid like using EV's to power the grid during peak, discharging the battery, reducing its lifetime and requiring more liquid fuel to power the vehicle. The place and time to recharge a PHEV is at home during the night. However, a reduced initial price of a PHEV with a short range battery could easily dominate over the perceived long term cost and availability of liquid fuel.
I say tough luck. someone will get an SUV on the cheap. I don't own an SUV so I don't care.
yes they will. they will be clamoring over any car that has a high MPG. who said there will be shortages? as long as we don't price fix like during the 1970s we won't have that. we'll have price rationing. you can convert a Prius to a plug-in now but it's expensive. I think Prius is developing a PHEV model right now.
Price rationing will not work even for the rich, unless they can impose a police state. When the people who do most of the economic work can no longer do so because fuel is too expensive for them to commute, the government will impose rationing.
Rationing is rational - even for the rich.
Should we soften the blow for those who continued and continue to buy gas guzzlers in the face of high gas prices and higher prices to come. Even a year ago, gas was extremely expensive by historical standards. And, besides, these people clearly don't care about the environment. Is ignorance an excuse? Just asking because this question comes up in other areas as well such as the mortgage crisis. Did all these people not realize high risky their mortgages were based on their income? Or were they just hoping for a miraculous infusion of income. What about those of us who were prudent? It seems as though we are stuck with the bill of bailing out all those were imprudent.
Hate to sound like a conservative. But I have been able to get along fairly well by being frugal. And, rest assured many of those who got these ridiculous mortages were able to flip them for a big profit before the shit hit the fan. But we have to bail those out that got caught when the music stopped.
Many of us have argued in the past that we should take steps to discourage the purchase of gas guzzlers through the use of techniques like rebates. In essence, we were advocating policies to protect people from their own stupidity. All attempts to change the kinds of cars we drive failed, except for a belated lame increase in mpg standards which won't have an impact for years. And now we are supposed to feel sorry for those who insisted on buying their trucks and suvs.
But, yeh, the market did nothing to help us avoid the situation we are currently in.
No, I was pointing out that the market does not always make the right decisions. First people turned to SUV's in part due to cheap gasoline, and now some are rushing to fuel efficient parallel Prius's due to the rising price of gasoline. We need plug-in series hybrids and better consumer education than BAU during the transition to avoid a similar mistake with the SUV's. From a group perspective we can not afford to squander our limited resources on bad choices. The little battery in a parallel Prius is not enough. I do not believe that society will be able to adapt to the decline rates predicted by the Export Land Model advocated by WestTexas which will cause shortages. We have had a 6 times increase in crude oil price during the last 6 years with a pathetic demand destruction. I think within 10 to 20 years the U.S. consumption of crude oil will decline to somewhere between 5 Mb/d and 10 Mb/d. Personal transportation powered by gasoline or diesel will be history at those rates. Even though people want vehicles that have the range of a series hybrid, most can sacrifice long distance travel using liquid fuel if they have to. A 10 mile range from the battery of a parallel Prius will not be enough for local trips.
You are stuck with the bill of bailing out some mortgage lenders, borrowers' problems is the cover.
We will go over the cliff before the market has time to do its "magic". The number of Priuses sold compared to the total number of cars sold is pathetic. Knowledge of the market is necessary for good policy, but we cannot just sit back and let the market do its thing. Because we relied on the market all through the 80s and through the 90s, we got the signal from $10 oil that all was well and that we didn't have to worry about prices of global warming. Now that the geology is finally driving prices up, it is too little, too late.
No one is saying we don't believe in market mechanisms. We are saying that the market cannot capture current and future externalities. It is our politicians, however, who are arguing that markets don't exist, that most of our problems can be solved by getting rid of the speculators and nailing the oil companies. Personal responsibility? Nah, fuggedaboutit.
Due to the inelasticity of demand for gasoline, we have had just a few percent reduction in demand despite massive price increases. The market is not cutting it. Simply relying on the market will mean that most of the reduction in demand will simply be taken out of the hides of the poor.
The market couldn't tell us what was coming which is why most of us are pretty much screwed going forward. There were others, like me, who were not simply reacting to markets but reacting to other data projecting what the future would be like. That is why I bought a hybrid in 2002.
This is not a crisis, it is a catastrophe. I would like to know what reasonable plan anybody has. Remember, if we use less oil and gas, gear up all the alternatives the clever minds can come up with, and grow our own corn, the human population will still keep growing so that we'll be in an even bigger mess in just a few years. As far as I can see any market solution, in spite of all technological advances, will fail miserably unless there is a political solution. And that solution would somehow have to stop population growth. Without that everyone on this board is just as delusional as the guy who is ignoring the problem completely.
I believe the current increase in population is 70 million per year. There is no market solution, period.
Does anyone seriously think we can continue to increase the world's population by this amount every year and continue with BAU?
That's a bit more than the current populations of Tokyo Japan, Mexico City and Sao Paulo, Brazil added together.
I sure hope they don't want to live concentrated into a metropolitan area with all the amenities that are enjoyed by people in those cities, such as access to food, water and shelter.
Notice I didn't mention electricity and mass transportation let alone Tata Nanos powered by fermented bat's milk.
Family planning anyone? I think it's time to go and gore a few sacred cows.
Here is a plan for the United States. Where the U.S. sensibly leads, other countries will follow.
Admission of and education about peak oil.
Improve efficiency.
Conserve.
Use solar hot water systems with electric backup to replace natural gas powered water heaters.
Plug-in series hybrid vehicles.
Electrify our rail lines. Expand our rail system using the easements for interstate highways. This replaces semi-trailer trucks for long distance hauling. The government could provide loans to corporations for the conversion or construction. New companies would have to met minimum capital requirements to qualify for a loan. Encourage speed by offering a bonus if projects are completed within a specified time.
Expand waterway travel for goods.
Put grid-tied photovoltaic systems on roofs.
Put solar thermal electric generating stations in deserts like Nevada Solar One.
Install wind turbines where there is good wind.
Combine wind turbines with pumped hydroelectric storage.
Geothermal systems.
Research and make nuclear fusion work.
Electric generation from the tides.
Use spent batteries from electric cars to provide load leveling of the electric utility grid.
Re-regulate the electric power industry like a monopoly to force local electric power generation. All of the hype about our electric power grid being over taxed is due to deregulation allowing long distance power producers to compete with local producers.
Re-regulate the media so that corporations can not own and therefore control the media for entire regions. The consolidation of media sources into corporate propaganda sources is causing the BAU rhetoric.
Increase the federal gasoline tax to discourage gasoline consumption and use the proceeds to maintain transportation infrastructure.
Eliminate the insane ethanol from corn mandate to unlink the food and fuel markets.
Get out of Iraq.
Cap and share system for fossil carbon sources to use market forces to encourage a transition away from fossil fuels.
Phase out natural gas, coal and nuclear electrical generators as they reach the end of their lifetime. Nuclear fusion would drive the final nail into their coffins.
Tar sands or oil shale could be converted to bitumen with (I think) less processing than making syncrude.
Improve agricultural practices making them more sustainable. Here is an idea: No-Till: How Farmers Are Saving the Soil by Parking Their Plows, John P. Reganold and David R. Huggins, Scientific American, June 2008. I am not sure how to power tractors. Perhaps ethanol and biodiesel could satisfy that need.
Mild population control:
A. keep abortion legal
B. legalize doctor assisted suicide.
C. eliminate the dependent tax credit for more than 2 children.
D. control our borders.
E. limit immigration.
Have a fuel rationing plan ready if fuel shortages occur. Know what things need priority over others. Personal uses, such as for transportation and lawn equipment, would have the lowest priority.
Conservation provides the short term response to tight supplies of crude oil. The others require more time. The general idea is to plug renewable sources of electricity into the electric utility grid while converting our transportation infrastructure to electricity. Hybrid vehicles would still use liquid fuel for long range, but since most driving is short range, a great reduction in transportation fuel would be achieved. The military, aircraft and construction equipment would still use fossil fuel. This plan sets us in the right direction to be renewable, sustainable and environmentally friendly while giving us time to solve the problems that will surely be encountered during the transition. Since we do not know and have not invented every technology that would eventually replace every use of fossil fuel, this strategy gives us flexibility to adapt.
Although everyone here likes to disparage "the market," like they know any better, actually most of this list would be most likely accomplished via "the market," which is to say, people motivated by higher prices. Prices (whether natural or "artificial" such has high energy taxes in Europe) seem to be the only thing that people react to.
Also, we might find interesting new solutions that nobody has thought of. I think the easy solution that people will go for, eventually, is to simply turn off their air conditioners. People lived before air conditioners, in all climates. Actually, a simple ceiling fan (think Raffles Bar in Singapore) can make a steamy situation quite comfortable, when combined with loose-fitting clothes and a cold drink. See Indonesia for example.
Attics act like giant storage heaters. In a hot day that heat goes way up, and is gradually released into the house.
The installation of a simple attic fan to drive air out under the eaves or through a pipe will greatly reduce temperatures.
You can also install solar thermal heaters, so the heat goes to providing how water instead of making you too hot.
They can be built yourself out of bottles and plastic tubing, but zoning laws mean that most will have to install something a bit more sophisticated.
Said by econguy:
With cap and share I propose to use market forces to steer the conversion away from other fossil energy sources. Without it, the market would use natural gas and synfuel from coal to replace gasoline because they are less expensive than sustainable alternatives. The market can not address anthropic climate change because it does not perceive it. After receiving a pair of warning shots about the hazards of dependence on crude oil in the 1970's, the market completely failed to end our dependence and instead, increased it. Governmental policies from President Carter tried to fix the problem achieving an improvement in energy efficiency and an elimination of fuel oil for generating electricity for the grid. The market fought and won the battle against California in the production of electric vehicles in the early part of this decade. Allowing the market to handle the limited supply of crude oil has led us full speed into our current predicament. The market is not up to the task without wise regulatory guidance.
Prices are the only thing people react to when all other signals are hidden from view under a policy of let the free market reign freely. The president needs to explain the situation in certain terms while the media echoes the message. I do not expect leadership under the current nor next administration.
Actually, the president can intervene in the market through the Economic Regulatory Administration, part of the Department of Energy, in law at any rate: http://www.law.cornell.edu/uscode/html/uscode42/usc_sec_42_00007136----0...
Our standby gasoline rationing plan could be invoked pretty quickly but it would make sense to appoint an administrator first.
Chris
We can't build a Prius for everyone; there isn't enough of a resource base to do that. Let alone pave the roads, keep the food system going, yadda yadda yadda. All these crises come together - climate change, resource depletion, toxic environment and even gross economic instability AND inequality because they are linked: this Petri dish is full. Environmental scale systems responses are no longer linear.
The US' sensible and reasonable plan is a totalitarian police state. That state will continue to make matters worse because the constituency it serves - the rich and powerful - will continue their current behavior as long as they can. Long past the point where the rest of us are gasping for air. But of course, if you haven't done anything wrong, you have nothing to fear. Gasp, gasp.
A police state is the typical solution for a failed economy. Only this time the economy isn't limited to jobs and banks, but the entire life support system called planet Earth.
cfm in Gray, ME
Certainly we can not build PHEV's for everyone who wants and can afford them in, say, the next 4 years, but we can replace the entire personal automobile fleet within a decade if we make the effort. Since PHEV's are more efficient than current vehicles, a 1 for 1 replacement would reduce energy consumption. However, I doubt there would be a 1 for 1 replacement because inflation and job loss during a depression would likely force a significant portion of the population to use less expensive options. Since the TVA built hydroelectric dams during the depression of the 1930's, it is a matter of allocating resources appropriately.
In scaling up production to about 10 million vehicles per year, what parts of a PHEV do you think would exceed the resource base? Wiki: Automotive Industry states, "In 2007, more than 73 million motor vehicles, including cars and commercial vehicles were produced worldwide" with 19.4 million sold in North America. Since junked vehicles get recycled and a Prius uses less material than a SUV, it seems possible. Perhaps you are concerned about copper (production has not peaked yet) for the motors or some material in the batteries.
Climate change is too gradual to come together at the same time as peak oil. Provided we do not exchange gasoline and diesel with other fossil fuels, peak oil will cause a drastic reduction in our (USA's) fossil carbon emissions. Roads can be paved using bitumen from tar sands and oil shale. I think it likely these resources will be developed to provide a few million barrels per day equivalent. To keep the food system going we need to stop making ethanol from corn. Converting transportation to electric fuel and increasing conservation and efficiency will make oil available for the more critical functions, such as farming. It seems to me that biodiesel or ethanol made from something with a higher ERoEI than corn could power tractors since they are only a fraction of the transportation sector.
Human induced climate change is an expression of resource use - of our overuse of carbon sinks or other large scale developments. So is environmental toxicity. It might be that one prius uses less resouces than one small conventional compact car - that's not what I'm concerned about. My concern is that making another 10M cars only digs the hole deeper.
"It is indeed about allocating resources appropriately," said the Golden Goose.
cfm in Gray, ME
By necessity a farmer is located in a remote, rural place. Without a 4 wheel drive pickup how does he travel to town across dirt (muddy) roads to get supplies? If your response is something like all farms must be near a small community, then you condemn about 5.7 billion people to starvation. Horses and wagons were used in the 1800's with a vastly smaller population.
This is not a crisis, it is a catastrophe. I would like to know what reasonable plan anybody has.
As far as I can see, there is no reasonable plan. Instead, it appears that the leaders of technologically developed countries will be forced to get into the business of allocating death, or rationing life, or whatever euphemism one would like to apply.
That sounds like hell on earth to me, comparable only to a relatively few isolated situations we know of, in which people have resorted to cannibalism when there is no food left and no way to escape.
On the positive side, I see almost no possibility that humans will be completely wiped out by the coming events. In fact, I think most of our knowledge and civilization are going to survive. I predict that there will be a lot of remaining humans and a lot of remaining knowledge and technology. By "a lot of remaining humans" I mean somewhere from tens of millions of humans to about one billion still alive when the situation begins to stabilize.
A limited nuclear war might change some of the parameters in this scenario, but even if there is eventually some use of nuclear weapons, I stand by my overall prediction. (Actually I think there is about 50% chance of a small to moderate nuclear war, started irrationally, because such a war would help no one, including the country that attacks first.)
Massive nuclear war would be an entirely different situation. In that case I don't see how anyone can make a credible prediction about human survival. But I believe a massive nuclear war is extremely unlikely.
We're fine Kenny, just fine, the polar ice cap will be gone in a year or two and then we can get some rigs into the Arctic and then it's break out the SUV time again! /tongue-in-check
Five years before we will be able to rationally plan on when the ice will have finished melting in the Arctic, five more years to build the shipyards for the drilling rigs, five more years to build and operate the drilling rigs, and then we will be producing oil from the Arctic.
Which by then will be producing more oil than the Persian Gulf will be exporting. It's just going to slow the decline/crash in oil production.
The good news is, Russia is a civilized country and will act responsibly with the vast new wealth from the Arctic.
I disagree strongly.
A couple weeks ago I saw a US poll "who do you blame for the oil price" which demonstrates the inverted reality of public perception.
30% Congress
30% consumers
15% Bush
15% 'speculators'
5% Big Oil
5% OPEC
Notice that the two groups that were actually responsible for producing oil came in dead last.
What this amounts to is an incredible level of FEAR. The average American can't bring himself to blame those responsible directly.
Under the theory of cognitive dissonance, people rationalize, displace and internalize (i.e. 'factor-in') their frustration and end up accepting their being screwed with 'good humor'.
Incredibly, even the out-of-control speculators who seek to turn someone else's tragedy to their advantage come in 4th in blameworthiness!('after all, they have a legimate role in the functioning of the market!'-huh?)
You want to reveal the nature of Peak Oil, you must dissect it; it is a production problem based on geology. It is a societal problem in that we are living based on a delusion of infinite supply, nurtured by energy companies, OPEC and their surrogates(EIA, IEA).
We need to focus on the problem not the theater.
Congress, consumers and Bush( guilty perhaps for trying to free up more oil) are merely convenient whipping boys and no amount of self-flagellation will alieviate the shortage.
I guess I find it heartening and somewhat surprising that consumers blame themselves in such large numbers, since drastic reduction in consumption is one of the few short-term options open to us. Calling it an "option" is I guess a bit wrong-headed, since we are all having conservation thrust upon us.
But with Congress so high on the list, it's no wonder that legislators are working overtime to try to displace blame onto the unregulated commodities markets and the evil oil companies and OPEC.
The forgot God, geology, and mother nature.
I saw a slam on the Market a few posts ago. Investors (or anyone else) make decisions based on experience. The experience is the Market always rebounds. What they don't understand is that the economy is oil based and this time it may be down for the count. You are just now seeing headlines in the financial pages saying things like 'Markets decline over worries about rising oil." Investors are starting to get it. Now they just need to realize the problem is not 'Government', 'Consumers', 'Big Oil', or even 'OPEC'. It's scarcity.
Your points on consumption illustrate that the market does what the market does best. It regulates supply and demand. The supply goes down the prices go up and fewer people can afford the commodity (conservation). Now you have less demand so the price stablizes until the supply is constricted some more (more conservation). This cycle continues as more and more people are priced out of the market. As you stated, we are having "Conservation thrust upon us".
Like any dieing patient, the public have to go through the 5 phases of acceptance. Denial, Anger, Bargaining, Drepression, and finally Acceptance. I think it is safe to say that we are in the Denial phase except for those on the lower economic rung and they are just plain ANGRY. Part of public denial is to assign blame to someone or something and you are seeing a lot of that right now. I think we will see several sacrifical scapegoats brought to slaughter before folks finally realize this peak oil think is real and it's going to kill us.
The market will do what the market does best, until it too dies. The market will behave differently as we move from the paradigm of supply and demand to a market based on scarcity.
You have made a good and scary point. CNBC spends a lot of time talking about the "bottom" as if all we have to do if wait for the bottom, buy back in, and all will be fine. My guess is that more and more people have concluded that while there may be a bottom, the market may reach a bottom and just stay there. What happens when the big institutions conclude the same thing. Then you will see a crash in the stock market like none other, perhaps including the great depression.
Fortunately,most of the people here are probably ahead of the curve. I wonder how many people here have much less in the market than they used to or are already completely out. There are a few things like fertilizer, however, that might be worth investing in, the stuff that's getting scarce. Oh, yeh, and oil.
How is this inverted? Prices are set by those who pay them. The problem is not production, or demand, but the convolution of the two.
Production, however, is limited by hard realities of nature, and it's silly to blame the earth for not having enough oil. Therefore, the only rational course is to blame people for wanting to purchase too much of it.
We can either invest ALL of our remaining equity and energy into renewables and nukes, or we can spend it all chasing the ever more elusive barrels of oil. Both will be economy-wrenching and painful, but the first might eventually lead to salvation while the second can only lead to ruin.
Producers set prices, not consumers. If a product cannot break-even
it won't be made no matter how much consumers may want it.
Once a producer is in business he needs to recoup his investment by selling more of it and so he attempts to reduce his price to attract more consumers.
The oil companies and OPEC have not worked together to produce more oil for consumers which is why we have this crisis. Oil is far from exhausted. Had OPEC and Big Oil done their jobs production would not be peaking (and we might well have been able to produce 100 mbpd in a perfect world much of it unconventional oil(there is as much unconventional oil as conventional oil left).
I'm not surprised that Big Oil and OPEC failed to optimize world oil production, but are consumers and Congress responsible for that?
Instead these two conspired to delude the world about the oil problem with phoney reserves while time ticked away.
The politicans ignored the 'successful' oil market capitalism that produced $10 a barrel oil, and they stopped energy conservation programs and gutted energy research.
Consumers could'nt bring themselves to criticize such a wonderful system either.
So who is responsible? Do you blame the thief who stole or the cop who was snoozing at his desk? Honestly they both need to be punished but not equally--one for stealing(jail) and one for sleeping(fired).
Consumers are being punished now, but not the oil producers?
That is strange reasoning.
"Producers set prices, not consumers"
not true. you, a consumer can set the price, if something is too expensive, dont buy it. if enough consumers set the price this way, the price will come down.
more correctly, suppliers(producers) and demanders(consumers) set the price.
"Consumers are being punished now, but not the oil producers?"
So if we punish oil producers, we'll have all the cheap oil we want?
How does that work? Congresscritters, with their advanced science and geology degrees and godlike skills, take over and run Exxon, Chevron, etc.? With their advanced military degrees and godlike skills, they conquer and run OPEC? With their advanced economics degrees and godlike skills, they have producers run forever at a loss magically financed from thin air? Yes, any of those options is certain to work out just peachy keen, yah sure.
Of course one should always look for the silver lining, however microscopically small. Any of those options would certainly bring about the final solution of the traffic congestion problem.
I suspect that once Barack Obama wins the election, Congresscritters will feel licensed to engage in an orgy of populism, based on sentiments such as yours and enabled by a reluctance to veto. So by late 2009, the American population will no longer have time to whine about gas prices, being much too busy with an orgy of fury at the inevitable result of the orgy of populism - "no gas" signs plastered everywhere. Their mood will not be improved by the looming threat of ice and snow, which render walking dangerous, two-wheel vehicles all but useless, and trains using third rails erratic, pushing more people onto unruly queues for buses (where they exist) already hopelessly overcrowded beyond the point of uselessness.
Aaagh! Stock up on popcorn so it's handy when the show starts...
And if we reward oil producers, we'll get all the cheap oil we want?
PaulS--how can I put this politely--you're a cheap oil addict!
The amount of oil being produced hasn't decreased substantially but prices have doubled, why?
Who sets oil prices? I am using atleast 10% less oil than a year ago, yet prices have doubled----how am I to blame?
Do you think that Rex Tillerson does a lot of geology?
Oil companies are run by accountants and lawyers, just like Congress.
We could nationalize the oil companies and run those corporations
if necessary. And look at them, those examples of fine old US capitalism are having their lunch stole from them by the likes of Petrobras and Statoil( state oil companies). Big Oil sucks!!
OPEC does a REALLY shitty job of producing oil! A cat could do a better job.
But as long as there apologists such as yourself why should they? Afterall, '[Such and such] is the head of a big oil company, he MUST be a genius!'
OPEC does a REALLY shitty job of producing oil! A cat could do a better job.
Here you go again talking at cross purposes to yourself. You stipulate that OPEC, that bunch of governments, does a poor job. And yet, by implication you assure me that Congress, part of a government, is going to do so much better. In the real world, it's a rare and happy occasion when government manages to produce something well, so even the Europeans often delegate such tasks to 'quangos', or just contract them out to companies. Production just isn't governments' strength, and that goes all the way back to the ancient Athenians - who used contractors to build ships and the like - and beyond. (It remains to be seen how long Petrobras lasts before the politicians start looting it again sufficiently to bring it down to the state of Pemex.)
And you complained that OPEC is doing a poor job of "working together to produce more oil for consumers", so, again what do you propose to do about it, other than to direct your bluster to irrelevant parties who don't control the big supplies, such as non-OPEC companies? GWB tried begging OPEC, it didn't work. The Joint Chiefs don't seem overly enthused about conquest. So what's left? (Conservation? But you didn't mention that, you just complained about high prices that actually encourage conservation, as opposed to mere action-free political bluster and yakety-yak, which do nothing much.)
The amount of oil being produced hasn't decreased substantially but prices have doubled, why?
Ummm, uhhh. There's been plenty of vigorous discussion about this around here, provided by people who are much more privy to the inner workings than I am. They've mentioned things like, oh, what was that? supply and demand, as well as other minor factors. Have you been listening for the last 22 weeks and 5 days, or is your inchoate rage against those who actually produce what you use (even if at only 90% of the rate last year) so intense as to make listening impossible?
You should look at the supply and demand 'curves'(lines) in price/quantity space favored by economists. With oil you draw
a distorted 'x' with a sharply sloping(price inelastic) supply and demand lines.
At the intersection there is the price equilibrium point, above that point you have a region called supply glut and below you have a region called shortage.
Assuming that nobody knows what THE price actually is, I would guess that we are in the supply shortage region. If you are in a shortage region demand is irrelevant as supply 'movement' determines the price upwardly toward equilibrium.
http://www.investopedia.com/university/economics/economics3.asp
You are not even operating on the demand curve but on the supply curve. Over time you have supply curve demand curve shifts, but it isn't instantaneous.
So the way to move the market toward the price equilibrium point is to increase supplies along the supply 'curve' up. In the oil markets it's done with biofuels and unconventional oil.
I don't agree with your characterization of OPEC as a bunch of governments, they are a cartel, similar to a monopoly. Back in the 1970's, OPEC members already believed that they had a monopoly on oil reserves but they were wrong. Monopolists don't need to be very clever.
The Prudhomme Bay, Cantarell and North Sea supergiant fields were discovered putting the world into an oil supply glut, which ended in 2000. Now these reserves are drying up and we are back to OPEC and they are back to their old tricks. Big Oil's hope in 2000 was that the Caspian supergiant would keep prices low, but its turned out to be a heavy oil stinker.
And the Canadian tar sands supergiant was developed by the Canadian government, speaking of the horrors of government sponsored energy.
All that we all need need to do is find another supergiant!
That's the delusion of Big Oil.
And I don't think that will happen.
So do I blame Big Oil for failing to find more supergiants?
No.
I blame them for not developing alternatives as they have known about the limits of oil production since at least 1970.
Are they blamefree? Absolutely not!
They are guilty of incompetence and self-delusion.
Don't reward that!
If producers had done their so called jobs, we would even be worse off as we would be further down the depletion trail. This is not a crisis, it is a long and continuing emergency. A crisis is something you work through. This will not be worked through.
I supposed we could debate who is to blame all day but don't think that it going to get us any more oil.
You're describing a market with surplus supply. In that case producers set prices by withholding supply if the market price drops below production cost. We're in a world of no surplus supply at any cost. With limited supply, the consumers set prices by bidding against each other up to a price they're willing to pay. Production cost is irrelevant.
You say we wouldn't be peaking yet if OPEC and Big Oil hadn't mismanaged their production. Even if it's true, it would just mean rising to a higher peak before crashing down.
Yes. In all the talk from those who think the answer is drill, drill now, there is never any talk about the opportunity costs of all that drilling. That will be sunk, valuable capital in a nonrenenewable resource. Doesn't seem prudent as Papa Bush used to say.
The the inverted reality of public perception is a creature of the media. The media pound the public with certain images, and the then the pollsters measure how much of this has soaked in. Meaningless.
The media tell what the military-corporate elite want told. Period. When there are conflicting views, they are conflicting views held by conflicting factions in the elite.
The public has no real leadership, no one explaining to them the reality we face. And people don't race home after two shifts to scan the blogs.
I think PO is held to by a powerful faction of the elite. But it is a view that it is not in their interest to propagate. The measures needed to address it are not in their interest. Far better to have it that it is the oil-producing countries and rapidly growing competitors that are at fault. This justifies the military expenditures that are in their interest.
It's all Mother Nature's fault for not making enough oil for us. Didn't she know that we're all spoiled, selfish brats, and that we expect to get whatever we want, forever, handed to us on a silver platter? Who does she think she is?!
And don't even get me going about that "entropy" business!
;-)
It seems to me that those sorts of investments have become so expensive that they are no longer worth making and we should just finish out using what has already been drilled and quite after that. We should do this at a cheap price so we should be sure that there is always 5 million barrels a day of spare capacity so we need to restrict our consumption below this level. Then we can finish using oil at $20/barrel rather that gaining perhaps 5 more years but paying $200/barrel the whole time for the honor. More at: http://mdsolar.blogspot.com/2008/06/oil-is-too-expensive.html
Chris
The answer is always "more investment" as long as it's somebody else's investment that's required. This is just a variation of "the market will provide a solution." Like all that's required is for someone to go out and build a couple of oil factories.
It is possible to build oil factories using solid carbon or natural gas an feedstocks. But this is not cheap energy and so it does not make sense. The advantage of oil is that it is cheap. Once it is expensive, it should be abandoned.
Chris
As it is beginning to.
Yes, I just think we should be very deliberate about sabotaging any efforts to explore for expensive oil by crashing the price down as far as we can. It does not make a difference to us, really, if we stop using oil 15 years from now or 20 years from now but it does make a difference in the price we pay along the way all because of wasteful investment in expensive to produce oil. So, lets deep six that right now. Cut consumption to create 5 million barrels a day spare capacity and keep on cutting to retain that figure. Then we'll have cheap oil throughout our transition which we have to make in any case.
Chris
Then we'll have cheap oil throughout our transition which we have to make in any case.
No. Not the "cheap" part anyway. OPEC would just cut production by the same amount. If that failed to keep the price up, rust would soon eliminate the spare capacity.
Do you think that is what OPEC is doing right now? Has rust eliminated spare capacity before?
Chris
It's almost impossible to know for sure, which is why there is so much discussion about it by TOD principals and others. Whether OPEC intended to or not, they've carried out a new round of price discovery, and it appears to me that they really, really like what they've discovered, thank you very much. So I don't expect them, ever again, to open the spigots as wide as before, nor to rush out to overinvest, regardless of where the line between voluntary and involuntary production (i.e. extraction) limitation might lie. Not unless somebody collapses the market by finding a couple more Ghawars, and it's less than clear where those could possibly be located.
As to rust, I'll trust Simmons, who harps on it regularly - it's a bloody expensive fact of life and it's gotten serious. So even if one cannot point to a specific instance where "rust eliminated spare capacity" - and it would be a preposterous to demand that one be able do so in the face of the abundant secrecy surrounding the big producers, who are all state actors who cannot be compelled to reveal their secrets except possibly by conquest - rust continually drains huge resources out of the production system. That expense comes from somewhere, and one obvious somewhere is new investment. As governments pushed by populists start looting the system, one might even expect new investment to dry up. (It's about the same as the New York subway system in the 1970s, reduced to rust and frequent fires, brought on by populists who felt that the world owed them nearly-free rides and kept fares well below what was required, along with the usual massive subsidies, to sustain the system.)
Well, the general picture I get is that when OPEC says it will raise production that is met with derision here. And that is because they can't other than bringing delayed new projects on line.
Seems to me that the way to find out is to try. If we cut US consumption 25% and the price does not fall, we can be very sure that there are geopolitical reasons for keeping the price high since that is really the only time OPEC actually acts with unity. If that is the situation, it would be best to know. And, we would be a good step along the way to extricating ourselves from the problem.
Since the idea is to end oil use within 15 years, I doubt rust will be the largest concern.
Chris
Does anyone know who Obama's science and economics advisers are? I'm thinking that we might be able to project a trajectory of future actions and policy proposals if we knew who he listened to.
George
To answer my own question:
I found this site, tracking Obama's advisers:
http://policy.wikia.com/wiki/Obama_advisors
If anyone is interested.
When you follow this one to the fellow's article ... clueless about PO or just not saying anything?
Sheesh. In the U.S., TPTB have publicly proclaimed there is no oil problem for 30 years now. Jimmy Carter is still an object of derision in the right for his energy policy. So you expect the guys running governments and corporations (the same guys who's long-term outlook extends to the next quarterly report or election) to say "Our apologies, but we wuz really wrong. It turns out we're totally screwed. We would have mentioned this sooner, but it really didn't affect the amount of lucre we were raking in until just now."
Good luck with that. Most likely they're making sure of their places on the lifeboats right now.
This is the most likely tone for what you're going hear:
It's all in your head
(via Atrios)
Yup.
McCain did say that our recession is all "psychological". Let's get out there and start thinking happy thoughts!
Just out of curiosity, why is the subject of Iraq seem to be completely taboo here? While participants scrutinize every last detail of Saudi, the potential of Iraq gets nary a mention. That nation likely has far greater reserves than Saudi does. It is significantly unexplored and its stated reserves could well be higher. Moreover, this is the cheap and easy oil that we've mostly run out of. The political situation is there is definitely stabilizing, though nothing is certain as yet.
Kurdistan is gearing up to put out about 500kb/d very soon. If an agreement is reached with Baghdad, this could reach 1 million b/d in only several years. As for the rest of Iraq, boosting production from 1.5 to 2.5 mb/d could also occur rather quickly and going to 3.5 is not out of the picture within 5 yrs.
Sure, I recognize that this is all if, if, if. But then all oil ventures of any kind are iffy. In any case, should things start to go right in Iraq for a change, it would throw off much of the hard work done by experts here. My point being that perhaps there is too much of a negative bent here, and not enough inquiry into whether more is available. "More" should not be a matter of opinion, for it there is any more to be had, human nature will see to it that it will be. With oil over $130 the Iraqis are beginning to wake up to the gold mine they are sitting on. Whether that brings unity or more fighting remains to be seen. If Iraq does begin to come online, then that will extend the curve somewhat and buy a bit more time to make adjustments with less pain.
I think this is an issue worth discussing and watching.
I would argue the risks, probability, and magnitude of Iraq production are already factored into the oil futures pricing. Things may work out better, but even best case that 1 or 2 million barrels per day will by itself offset only part of year's decline in existing past-peak fields.
For any meaningful reprieve (even a year or two) a lot of things have to go right, and even then it's only a temporary reprieve. We need to get in the mindset that we're buying time to get wind turbines and nukes built, rather than continuing business-as-usual. Note that the converse is also true -- if a few things go wrong (major fields go into decline earlier than expected, platform attacks, Iran war, or whatever) the situation can get worse a lot faster as well.
I'm not expecting a reprieve. My main interest is mitigating a collapse. A lot of people here seem to looking for the most likely scenario (myself included) as well as other possibilities. While I don't know what other people's motivations are, mine is not ending up in a cardboard box by the side of the road as I'm too old to begin a new life as a laborer working the fields.
Frankly, I'm getting tired of the pervasive argument that no more new oil should be produced "because it won't solve the problem". That is a prescription for disaster, one that guarantees me a short life in a cardboard box.
I agree on all points. As oil goes up, it makes perfectly good sense to do many things, and they will even make fiscal sense to do so:
1) Conserve
2) Produce new oil
3) Produce unconventional oil
4) Produce alternative energy (wind, solar, bio, etc.)
5) Work on fusion and other long-term "solutions"
The downside is that unless a new form of cheaper-than-oil energy comes into play, our world markets must reset to the realities of more expensive energy, and that may well reduce the carrying capacity and standard of living of the world.
I do wonder often what people's true motivations are behind believing in peak oil.
"I do wonder often what people's true motivations are behind believing in peak oil."
uh................that oil is a finite resource ?
I am positive some are here with that belief, but after awhile you start to sense that some people have other agendas. they have a beef with capitalism. they believe in population overshoot. they think we shouldn't have kids. they hate cars. they hate the suburbs. they hate our consumer socitety. of course peak oil will deliver us from that, they think. there are all sorts of other agendas and peak oil is just a means to an end. it's all just below the surface. I think some just want things to go bad.
Undoubtedly, there is a lot of it here.
You forgot: They hate our freedom.
It is not about having a beef with capitalism, it is about a beef with people who think capitalism can solve all our problems, which would appear to be you. Peak oil is not a means to an end, it is an end. These other "agendas" as you call them are, in part, a response to peak oil and declining resources and quality of life in general. It is just too damn bad that there are other people here who have a different viewpoint than you. You must be feeling really smug that you have no agenda, like for example, your repetitive preaching to everyone about how the market will fix everything.
Peak oil is a situation which is creating a host of problems. Most people here are interested in proposing points of view that, from their perspective, will address that problem. If people here just wanted things to go bad, they wouldn't bother being here.
Each one of those "agendas" you mention hasten the arrival of peak oil and make the problems associated therewith, worse. If you don't agree, then feel free to tell us why all these people are wrong instead of just slipping in a snide dismissal.
a big part of why I disagree is the market. however, since so many disregard it and deride it there isn't much I can say. keep in mind the market has given us everything we have. remember when computers and cell phones were expensive? now kids grow up online and carry cell phones.
I can't give an explanation that a lot of people like because it would be like arguing creationism with someone who doesn't respec science. it would be like arguing climate change with someone who doesn't believe the science.
Well said and I agree. The amount of money to pay contractors and armies to defend the oil fields and pipelines increases as the price of oil increases. Of course, it is not a coincidence that the US is trying to arrange for a long term presence of some kind. Bush is an oil man after all. Does anyone really believe that WMD was anything but a cover story?
"...should things start to go right in Iraq for a change,.."
are you anticipating the election of obama or what ?
of course, the iraqis are talking about troop withdrawl as well.
Iraq is not taboo, it is just that there are so many imponderables that seem to control both current and projected production that it is difficult to make any projections with much confidence in the numbers that one puts down. There has been talk of boosting production now for a number of years but plans have to be turned into action, and oil has to flow consistently and relatively safely before many of us will be convinced that there has been a sufficient change in status to accept the higher production rates as being sustainable.
Good! Check out the article on Kurdistan in today's WSJ.
Of course, if we only bet on sure things, not much in this world would ever be accomplished. Life is imponderable, but that doesn't stop us from going ahead and DOING. Don't bet on it? Don't bet on dying in a car wreck, either.
The banks modeled their mortgage securities based on what they thought were sure things. They were wrong, they die. Life goes on. If we're going to model predictions, we need to account for the variables, no? That's what Wall Street missed.
I don't think it's a matter of only betting on sure things. It's a matter of the odds.
Iraq will start producing more oil, but the issues in Iraq are not just security issues. In fact, to me, they're not even primarily security issues anymore. There are worldwide production delays, and it's the delays that are foremost in my mind at this time when I trade oil.
When you make your bets for the future (which everyone is doing whether they know it or not), it's not really a decision between a cardboard box and betting it all on Iraq. You can bet on solar for your house, for example. You can bet on royalty trusts. You can bet on efficiency. There are lots of good bets out there right now with much better odds than a rescue from Iraq.
The question is: who does the betting? It's one thing for oil companies to bet on finding oil in Iraq, as the potential payoff for them is huge. It's quite another for the world to "bet" (by virtue of continuing consumption at current levels) that lots of oil is there. In that case, the upside is moderate but the downside is huge.
Iraq is not "significantly unexplored". There are areas that are less explored than others (such as the western areas), but based on what is present in neighboring regions of Saudi Arabia, the likelihood of significant accumulations is not high. Recent claims that their reserves surpass those of KSA are not supported by anything credible.
Isn't Iraq a place where we could send our (US) experts in to find out thier true URR? Isn't Iraq on par with what Simmons is touting that we do...send in the troops to audit the fields?
Well, stop pondering then.
It's kinda hard to get reasonably rational people to bet when you can't even guess at the odds. That's the problem with political and sovereign risk, as in Iraq. Rational bettors are more likely to go with something they can at understand at least a little.
Laherrere discusses Iraq in this PDF. He does not feel they have larger reserves that SA.
http://www.oilcrisis.com/iq/iraqLaherrere.pdf
One of the Myths he is always trying to explain is that the Middle East is not under explored (see his creaming curves for an explanation of why he holds that view).
I recall some discussion, early on in the Iraq adventure, that their oil fields had been damaged during the oil for food era by wasteful pumping techniques. (Not an oil person, so can't discuss the details.) Haven't heard anything about this recently. Does anyone know whether this is true?
Iraq will see the same kinds of production delays as other projects, and production delays are a key part of the short- and intermediate-term problem. Even the IEA feels the 500kb/d out of Kurdistan will be delayed beyond current projections.
Because of delays, Iraq is probably good for extending the plateau, not much more.
I agree the Iraq situation is worth looking more closely at.
I think the critical variable is oil infrastructure. How soon will pipelines be built, to transport extra oil? Is there some other approach than can be used for export? Without infrastructure, all of the proposed new exports are just theoretical.
Gail, most of the pipelines are already there and need only repair or expansion, so its not like starting from scratch. In the north there is already a line through Turkey but obviously the Turks aren't happy about funding the PPK. On the bright side, this is creating a motivation for the moderate Kurds (a majority) to reign in their rebellious brethern. A lot of people and oil companies are betting on the Kurds making peace with the Turks. This seems probable to me as the Kurdish majority has a lot to gain -- they'll get rich!
As for the south, I think greed will ultimately win out and money will pave the way to getting oil production going. Some call it bribes, but for Arabs its a time-honored way of doing business. Everyone has written Iraq off, but not me, and I don't see it as a failure. I followed that war for five years and never thought it a lost cause or unwinnable. TV only showed us the bad side so we got a very warped image. Troops returning from Vietnam universally said it was hopeless. Troops coming back from Iraq rarely ever say that, quite the opposite. There is a large core of good, decent and educated people there and it they whom we are hanging our hopes on.
I wouldn't bet against Iraq.
Thanks. I was thinking based on yesterday's WSJ article that they would have to start from scratch on the pipelines. It would be good if the Turks could make peace with the Kurds. As you say, money may help the situation.
The only guy I spoke to privately about Iraq (instead of online where it could be monitored) said it was hopeless. But it was just one guy and several years ago, so what kind of credibility does that have?
Maybe his unit was in a bad area.
I hear that because of ethnic cleansing it's calmed down a lot.
Well, Obama will take over pretty soon and we'll see what he says once the armed forces and the intelligence services are reporting to him instead of Jr. He'll decide the surge worked or didn't, and I guess that's what we'll work with.
It would be nice if Iraq calmed down and started exporting more oil. They need the money to rebuild from the damage from the wars.
Iraq is unstable, and it's production in recent years has been to do with wars and social chaos (above ground issues) rather than actual production capacity. Hence we can't extrapolate trends, and our data is less reliable, and harder to analyse. You have a fair point though, Iraq might be able to increase production significantly in the near future, which could well help us stay on this plateau for another year or two. Or it might not. There are too many unknowns about Iraq, so we can't predict what effect it will have. It's better to predict the worst case scenario and have things be better, than to predict the best case scenario and have things be worse.
The IHS etc. estimates of hundreds of billions of barrels in Iraq seem realllly dubious to me, simply given that with reserves of that size you'd be stumbling over giant fields right and left, yet the teams exploring in Kurdistan are piddling about with 100 mb fields like Tawke.
Curiously, How Much Oil Does Iraq Have ? - Brookings Institution was published in May 2003 yet lists various estimates of 200-300 bbo, on who knows what basis.
http://www.ft.com/cms/s/0/e3216bae-4daf-11dd-820e-000077b07658.html
In addition to the physical issues influencing the decline rate, which you ably outline, and in addition to ELM which subtracts from the the oil available to the oil-guzzling countries, there is also the issue of keeping the oil in the ground.
Gros makes the point that it is entirely rational for the oil-rich countries to do that, and for two reasons:
1. it will be worth more tomorrow than today, and
2. taking it out today means converting it into dollars, a declining asset.
In a word, oil is better than money. Why burn it? If you can manage to hang on to it. And the safest place to keep it is where it is. That, of course, is why Matt Simmons' call for transparency is whistling in the dark.
So while one can make some reasonable conjectures about the shape of the downslope on a physical basis, I think the struggle over getting-it-out today vs. leaving-it-in-the-ground-for-tomorrow is far more dicey, and makes it very difficult to predict the downslope.
Keeping it in the ground doesn't only apply to 'net exporting' countries - it applies to all producers. Now we are in a state of contango do not assume all producers will not act in their own best interests (and the interests of their children). This would seem to indicate that the present ongoing decline in 'net exports' will continue.
So, if 'net export' supply continues to decline, then 'net import' demand will be in decline ... if Chindia is increasing their share and can pay for it (no need to borrow the money) then the 'net exports' available to other importers will be in a much steeper decline ... so to all us importers the questions are ... how will I personally cope with a situation where I have less and less oil each year, is there anything I can do proactively to mitigate the effects, how quickly do I need to act?
Bear in mind that simmilar high price scenarios probably apply to all fossil fuels soon as well.
"Thus the market imperatives to extract more oil in the immediate short term to meet needs may over-ride more rational concerns about achieving maximum ultimate recovery by producing the oil more slowly."
based on my experience, that is how the us has operated all along( i.e. rule of capture and present worth economic evaluations ), that would argue in favor of the u.s. curve being an analog for the world.
on the other hand, horizontal wells notwithstanding, developement in offshore and remote areas has generally been more orderly, imo.
and yet we still have gas flaring in nigeria so as to extract the oil faster and blow off(literally) the gas. flaring is also occuring right here in the badlands of the missouri river (bakken in nd). both fine examples of stupidous maximus.
Probably more tyrannus ROI maximus than stupidus maximus.
tyrannus roi maximus based, again, on present worth economic analysis based on a bogus set of assumptions.
as chris christopherson wrote(the pilgrim)......... he's traded in tommorrow for today.........
That's "Kris Kristofferson" and "The Pilgrim: Chapter 33" is one of my all-time favorite tunes. Xlnt reference!
You hit it right on the nose elwood. I've been a petroleum geologist for 33 years and have worked on hundreds of projects. Not once has maximizing ultimate recover been the priority. I've seen profitable reservoirs in a well abandoned so the well could be recompleted in a shallower zone which had a significantly high flow rate potential. Several reasons for this MO but the biggest is the stock market driven agenda of public oil companies. They are judged on a y-to-y basis and thus the "net present value" (NPV) dominates the decision making process. Even privately owned companies are driven by NPV for other reasons but usually to retire debt and generate a better loan base to support further capital expansion through loans.
Now, having said that, the cumulative lost reserves of the great majority of those projects wouldn't add up to very much but with a few significant exceptions. It has long been recognized that Saudi has been pulling the wells at Ghawar too hard in order to maximise cashflow. Guessing how severe they've hurt ult recover would generate a wide but significant range. Mexico's sudden sharp decline in Cantarell Fld has been speculated by some to be caused by ramping up lifting volumes and prematurely coning the injected nitrogen used for pressure maintenance. For me, this is the most troubling aspect for estimating PO for the giant fields. They will not fit the historic decline patterns of fields produced in a more conservative manner. If, and a big IF, in the next couple of years we see Ghawar sudden slip into the profile that Cantarell has just developed we'll start looking back at today as the "good times".
As I've argued here, geological declines will be exacerbated by geopolitical positive feedback loops. As we pass peak production, issues like resource nationalism, energy infrastructure attacks, military adventurism, etc. will only accelerate. I think the key here is that 1) geopolitical forces will be additive, and 2) geopolitical forces are not subject to the same global and regional logistics curve where declines gradually tail off--instead, especially in regions like Mexico where geological decline rates may soon begin to tail off, geopolitical forces will likely see regional increases that maintain high effective decline rates...
Your points 1 & 2 are a little vague. In your view does decline breakdown into total chaos and violence, controlled or moderated violence, or general cooperation? Will militarized nations resign themselves to the inevitable or will they resort to establishing some regime by force?
If you believe that the situation will inevitably lead to war, then it makes little sense to talk about mitigation or even alternative forms since war turns everything on its head and there is no point in making plans. In that case, its strictly a matter of survivalism. I agree that wars are a distinct possibility, yet I'm leaning more toward a regime of cooperation as I think there's a significant recognition that war would only make matters worse, particularly with the ultimate weapons sitting in the background.
For these reasons I have to toss out the worst case scenarios since we can't mitigate anything when the future is just a black cloud.
I think the geopolitical result of decline is highly regionally specific. Decline in the North Sea seems far less likely to lead to an insurgency/unrest/state failure/infrastructure targeting/etc. than does decline in Mexico, for example. I agree with you--the best choice for nation-state policy is probably to cooperate, not to invade foreign nations to control oil, but current events don't necessarily demonstrate that we're following the "best policy" ("best" from the perspective of the "nation," but maybe not for those making the choices...). I think that's the key: if every part, and every nation could agree on acting to benefit the majority, not *their* minority, then we'd move toward cooperation. However, as I don't see that as likely, I think we'll tend more toward violence, especially in some regions. I think that awareness of this tendency is critical, though, and not futile, because it is our best hope for getting people in power (or convincing those already there) to actively avoid this course. Perhaps even more importantly, I think it argues for focusing on building resilient communities, scale-free minimal-self-sufficiency, etc. as a means to insulate against these effects.
Because there is a general world price for oil, we all experience the effects equally, excepting our ability to pay. Push come to shove, I could foresee a world rationing scheme developing in which case the poorest nations would benefit at the expense of the richest. Yet the richest would likely accept that. They we all go down the drain more or less equally.
I can also forsee the most probable war developing for the defense of an oil producer. KSA comes to mind. People who claim the US is an oil hegemonist are blowing smoke. if we are an oil aggressor, kindly explain why we gave up KSA and all the other nations our companies were thrown out of, and nationalized without a peep or compensation. Russia is a wild card and could well decide that its a good time to reestablish their lost empire which they clearly pine for. China? They don't seem militarily agressive and have kept their noses clean for a long time (but for historical empire disputes).
Iran is another wild card; their intentions are not good but they are becoming pariahs like N. Korea. The world is likely to unite against Iran without the US taking the lead. We need someone else to lead that parade.
So the more I think about it the more I'm optimistic that war MAY be avoided.
I think a key differentiation is between "war" in the WWII sense of armored columns and air-to-air combat and "war" as the general incorporation of violence into political maneuvering. I think we're quite unlikely to see the former, with the possible exception of airstrikes against Iran. Even that is an example of how we're far more likely to see occasional surgical airstrikes than ground invasions by armored division--It wouldn't surprise me if the Iraq War was the final example of that type of conflict. A good example is Saudi Arabia--there is no "blue water" army in the area that can actually invade them, and won't be for the foreseeable future. The threat to Saudi Arabia comes from the inside--and is a perfect example of why we tolerated the nationalization there, because keeping a non-Islamist, pro-Western government in power (by allowing them to buy-off their populace with the benefits of nationalization) allowed for continuation of the petro-dollar system, which is far more important than XOM profits. So, while I'm optimistic that we'll avoid war between nation-states, and that we'll avoid nuclear war (though not necessarily nuclear use by non-state groups), I don't think the signs are pointing toward more peace and more stability. I'd love to agree with you that the rich nations will realize that helping poor nations is in their long-term best interests, but that would violate what I consider a near-law of human action: any "solution" that requires large groups of people behaving much better than they have in the past is doomed to failure. We would have a much better chance of our Nation-States acting in their long-term national self interest if State leadership was actually concerned with their constituent Nation. However, since fiction of the Nation-State is largely dissolving, and the reality of the Market-State and the overlapping network of non-state groups is upon us, I'm increasingly pessimistic about the ability of the "Nation-State System" (increasingly inappropriately named) to solve the problems of the "median person." In an environment of individual and small-group superempowerment, when the "median person" is not benefited by the policies of the existing power structure, they work to change that structure by all political means, including violence.
I'd generally agree with you, Jeff - particularly about the likelihood of disinterested action.
It does not seem to me that there would be much that was surgical about a strike on Iran.
They might hope it would be, but shipping, Israel and the American presence would get quite a few missiles in return, so the would be surgery would get a lot more messy very quickly.
They are not going to be able to bully Iran, and the whole exercise would fall apart rapidly.
1. The US is broke. We can't import oil. Why not take out Gulf production that will only be going to other countries, anyway? At least the price increase will flatten the oil depletion curve.
2. Starting a depression in the rest of the world will decrease the price of steel and electrical generating equipment that we will have to import to jumpstart our reindustrialisation.
3. Making a bigger mess than even Somalia for the Democrats to clean up is not exactly going to demotivate the present administration, and will give them a chance to go out with some degree of glory.
4. Iran might really be attempting to develop nuclear weapons.
If we're in the mood for prognostication, conspiracy theories, and gov't vision, how about this -- at some level our gov't understands peak oil, and all of the bumbling moves are actually long term strategy.
1) Iraq was just an excuse to control oil fields and have a ground presence in the Mid-East. This means the gov't learned something significant between 1990 and 2002, else we'd have just parked there after the first gulf war.
2) Ethanol biofuel production is an intentional effort to convert food to energy, thereby decreasing the US import level while increasing the value of our exported commodities. Oil exporters are tiring of getting paper dollars for perfectly good oil, but they'll never tire of eating. Someday all that will matter is trading energy for food, and we're OK with that.
While it looks like we're bumbling about chasing inefficient solutions to ill-defined problems, we're actually just hedging our long term bets.
Disclaimer: I generally support the theorem "Do not require conspiracy where human ignorance will suffice", so the above seems pretty implausible even to me. If we had a long-term strategy, I would think we'd have fusion or wind farms underway as the third leg of the strategic energy stool.
I think your ideas are extremely plausible.
It makes no sense to credit political hacks with that degree of foresight when their main interest is the next election. Ah, the Rothschilds and the Bildebergs again!
"..the gov't learned something significant between 1990 and 2002.."
or maybe it is just that bush the daddy was a lot smarter then bush the boy.
He means that PO awareness (Simmons via Cheney?) reached the highest levels of the executive branch after Gulf War I.
I don't think it is the well decline rate that will change the shape of the global bell curve. Each well is just noise on the world production profile. More important IMO is the multiplying of seperate bell curves for each production variable worldwide - such as start date, size of field, ease of extraction, profit margin etc.
If [for example] you had 3 gaussian bell curves of the above parameters sitting astride the same date [x axis] then the output globally is a gaussian cubed - ie flatter top and a steeper cliff up and down.
My argument is that 2 or 3 parameters may well follow each others profile to worsen the final descent eg:
as size of field decreases, profit margin from rising oil price props up the overall profile [because they buy more rigs and workers etc]. When they BOTH turn the top and start to fall..shit happens
If we have a bell shape curve in discoveries, it does not follow to me that we will have a bell shaped curve with respect to the decline.
Most of our production is from big, old fields. There are declining now, or very shortly.
We have recently discovered, and continue to discover, smaller fields. These smaller fields drain more and more quickly, partly because of the new technology, and partly because there is less oil to begin with.
It seems like we good chance of a disproportionate share of fields going into terminal decline all at once.
As I understand it, the state decline rate of 4.5% or 6.0% represents an average decline rate, offsetting increasing fields against decreasing fields. As soon as more big fields tip into the decreasing category, there will be less and less in the increasing portion to offset the declines. Our stated decline rate will then tend rapidly to something more like the average decline rate of declining fields.
flatter top and a steeper cliff up and down
Note: not exactly, gaussians (and other exponential curves) have self-scaling properties that can seem counter-intuitive. If you 'cube' one you do get a faster fall but it's because what you have is simply a gaussian that's about 1.7 times (square root of 3) narrower but the identical basic shape. Perhaps unfortunately, you don't actually get a flattened or prolonged top.
Thanks, I see what you are saying.
I suppose I was thinking of a flatter top where the parameter peaks are close in date but not identical, [as in the lumpy plateau of CERA] as I feel all the parameters would look if viewed on a timescale from [perhaps] AD 1900 to 2050. And I was not expecting anything to be exactly gaussian - just generally bell curved.
I agree with the article and its conclusions. As such we are obviously in a pickle and the question is; what do we do about it? I like T. Boone Pickens idea of expanding wind energy in the wind corridor extending from Texas up through the middle of the country. He says if we expand wind to get 22% of the country's electrical needs, we can use the existing natural gas that is burned to provide that same 22%, and instead use it for transportation. He says that will reduce our dependence on foreign oil from 700 billion a year to only 300 billion a year. This, he says, will buy us 15-20 years to make the transition away from oil.
Anyone want to chime in on Pickens idea?
Here's a discussion from Joe Romm at Grist. I think the main problem is that it would be a waste to use all of that natural gas for gasoline, partly because the infrastructure for it would be huge, and who knows how much natural gas is around anyway. And just in case you're worried about global warming, it would be better to replace coal with wind, not natural gas.
There are two problems with Romm's reasoning:
- First, it is going to take a VERY long time to replace our vehicle fleet with EV's or plug-in's. On the other hand, existing vehicles could be converted to NGV fairly easily.
- Second, if we are to quickly go to EV's/PI's as our primary mode of transport, we would have to significantly ramp up our electricity production. However, if we to use wind energy to displace coal, then we cannot increase electric output at the same time.
The advantage of TBP plan is that it more palatable politically and financially, as it works in a gradual fashion: we could run our existing vehicles on NGV during the interim period as we build up our EV fleet along with our electrical generating capacity based on domestic renewable sources. "Politics is the art of possible." (c)
If the 'we' you are talking about is people who live in the US, generating capacity is a bit of a red herring, partly because EVs use very little, and the peak generating capacity in the States is around 1,000GW, whilst average load is only around 460GW, so although average burn would go up a but as long as the charging was structured to make most of it off-peak - the entire fleet if it were EV would only use around 100GW, but mainly because it will take years to have really substantial numbers of EVs on the streets.
Modest electric bikes and trikes are a different matter, and will likely provide quite a bit of personal mobility for many people around the world.
The electric drain from them would be trivial.
We might not need to increase our peak generation capacity to charge the EV fleet, but we would have to produce more electric energy anyway per law of energy conservation. So to get this extra electricity power stations would have to burn more fossil fuels at night - when EV's would be getting charged.
And as you said, in the beginning there would be very few EV's on the streets, the rest of the vehicles would be burning gas/diesel made from imported oil.
At least TBP plan gives us a chance to lessen our dependence on foreign oil much faster.
"Anyone want to chime in on Pickens idea?"
Yes, I will. I have been reading Pickens view for a long time.
First, he is right to invest in the wind energy industry, and one must give him due credit for putting his money where his mouth is if he actually gets those windmills built.
I am looking forward to the day when he and others discover the vast potential of CSP (Concentrating Solar Power) in the southwest and southern U.S., and others continue to develop PV to the point that it is competitive, at which point we could add millions of megawatts to our grid by way of combined solar and wind.
The first thing that wind will replace given the carbon release issues is, or should be, coal, not gas. But the combined wind/solar power available should be able to dwarf the coal produced power soon enough, and then begin to relieve pressure on natural gas consumption.
Having said that, I am VERY cautious about the idea of using natural gas in transportation. Natural gas should be considered the absolute queen of the fossil fuels. It is a clean and precious natural resource, and one that is very hard to substitute in quantity in MANY chemical processes. It is to this date our only relatively easily accessed source of hydrogen. It is already being wasted horribly in the tar sand and ethanol industry, and as a de-sulfuring agent in the oil industry in particular in attempting to supply ultra low sulfur Diesel to the American market. We are already abusing our priceless supply of natural gas with these endless and wasteful "energy by a thousand conversions" tactics.
If we use natural gas in transportation it should be ONLY as a range extending fuel in the most efficient plug hybrid vehicles we can build, and even then, I think there are methods we should explore before going to natural gas, such as methane recapture, and use of propane, much more easily transported than natural gas in a vehicle. Propane will be available for some time due to increased NGL (Natural Gas Liquids) production. Natural gas can also provide power for aviation by GTL in the most needed applications (i.e., military and emergency medical avaition, etc.)
But for the most basic transport needs, we must look to the power grid. As solar, wind and possibly nuclear power (and even wave and geothermal power) enhance our grid system) the electric power grid will become our greatest asset, a national treasure in preserving the modern age of communication, and finally transportation, augmented by very efficient batteries and capacitors and a small (and we should really mean "small" in the true sense) amount of liquid fuel or natural gas in the places where dense fast power cannot be replaced. If we use natural gas in transport, it must be efficiently, and not simply to fuel up 5000 pound vehicles with 400 horsepower engines and roar off down the highway in a final carbon fueled luxury joy ride.
I fear that without great caution, this is what will happen, and we will vapor away the most priceless energy reserve in history (better than crude oil in so many ways) and then even I will join the doomer camp.
RC
Can CSP boil water to drive steam turbines efficiently?
What happened to those California projects that petered out? Apparently there are some big problems with CSP.
Yes. The oil used by Nevada Solar One is heated up to 735 F. A heat exchanger transfers the heat to water to make steam.
For those who think solar is a tinker toy, the Nevada Solar One installation produces 64 megawatts...that's 85,760 horsepower from 44 acres. That's 1949 horsepower per acre. Some toy, huh? :-)
RC
Thanks for your reply RC, and share your vision of using wind and solar to reduce our dependence on fossil fuels. Also, I didn't realize before the unique value of natural gas.
I agree that it makes more sense to generate electricity with natural gas and then use that electricity to run a PEHV. We can get about 60% efficiency with a gas turbine and perhaps 50% overall. If you try to use an ICE you might get less than 30% efficiency. It would be good to see wind replace gas as the largest source of new generation as well. After that, we need to be shutting down coal plants. It is also worth replacing gas furnaces with heat pumps as this also saves gas.
Chris
Not to mention that won't we need more natural gas to act as backup for at least the wind and some of the solar. I don't see how his plan really frees up much natural gas.
Anyway, more power, so to speak for wind and solar. This man can't simply be trying to make money, can he, given his age? It is his contribution to the future and he has the resources to make it happen.
One nitpick I would have is that he is trying to substitute technology so we can have business as usual with no interruption in happy motoring. But alas, restructuring our cities and town to make auto mobility less necessary would go over like a lead balloon.
Under the circumstances, Boone is about the best thing that comes down the pike in quite awhile. And he says in his commercials, that we can't drill our way out of this. He is touting the peak oil message hundreds of times a day throughout the U.S. I have heard his commercial on local radio.
THANKYOUTHANKYOUTHANKYOU, HeadingOut.
So often we resort to the most comforting and convenient of predictions, a mere extrapolation of what is known: a symmetrical bell curve, or a rising price trend. But change is nothing if not episodic and chaotic.
Last night I attended the Portland peak oil meeting for the last time. Looking around, all I saw was a bunch of rich old white people (inc. mice elf - guilty as charged) who implicitly believe that the goal is a continuation of BAU. Sure, our SUV's will be gone, but the houses will be warm, the bellies full, the clothes clean. We just have to figure out how to afford it all!
These same people who decry a perpetual-growth model say that we'll need to borrow money to buy land, or capitalize the ecovillage. How exactly will that work, unless you can promise to pay it back with interest? How can fractional banking work without continuous expansion? The most painful irony is the pitch for local currencies used by Transition Towns, as if our own chits wouldn't be subject to the same economic rules. Will we have our own chip foundry in the village, and if not, how do we get an outsider to swap his electronics for our paper? Or must we live on tools that we whittle from our own trees?
There's a Jewish saying, "We make our plans, and God laughs." Not to argue for the existence of a deity, but surely we have to acknowledge our limits to perceive or even conceive of what our future holds. We here in the US have been so flush for the past sixty years, we have no memory of how people act under extreme hardship. The best recent models are Russia, Argentina, and maybe even Iraq. The lesson is just this: In the absence of any real security or authority, the bell curve is not smooth, goods are rationed by shortage instead of price, and the inefficiencies will compound and multiply as trust and future expectations vanish.
Put another way, the more successful the village or lifeboat or model, the more energy will be needed to defend it from those who aren't so fortunate.
Aha! A realist with experience? I'm smirking with you, particularly the part about fiat money and,
The only way to get around the endless growth model is to go back to a precious metals standard. Did you know that silver is STILL the constitutional money of the U.S.? I hope I live long enough to see the end of fractional reserve banking.
Did you know that silver is STILL the constitutional money of the U.S.?
Wishful thinking. Please read it sometime, it's not all that long.
Under Section 8, Powers of Congress, it says, among other things:
The Congress shall have Power:
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
In plain words, Congress has plenary power to do what it damn well likes, and at the margin, what it likes is providing nice comfy free rides (sometimes literal rides on the local streetcar) to the drones, at heavy expense to the worker bees, as a means of purchasing votes and amassing power. Gold and silver aren't even mentioned in that section.
The only place, in the entire document, where gold and silver are mentioned is in Section 10, which only restricts the states:
No State shall ... coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts ...
So if Americans don't want Congress debauching the currency, the Constitution will not help them, they must vote accordingly. But it would appear that, on the whole, voter preference is less for a good economy based on a stable currency, than it is for infinite free handouts on the never-never.
As to endless growth, let's not be silly. As long as the population is expanding and aging, expect virtually no votes for a static economy, as that would distribute ever less per person, even as said persons become, on the whole, ever more frail and needy. Like it or not, no number of repetitions of any conceivable statement about finite resources has much chance of changing very many of those votes.
Unless the plan is "Kill all the Caananites / Palestinians and steal their land" in which case God says "Hey, I thought of that first"
Thanks. You've just saved me a goodly chunk of time considering Portland as a final destination.
The thinking you experienced is seen all over. Even on this board there are people who routinely neglect or forget to consider all parts of the Perfect Storm: The Oil Wars, The Economy, Peak Oil, Climate Change, Collapse, Chaos and non-linearity, Cycles (of various sorts), Limits to Growth, Etc.
Not to mention good Ol' Murphy and his Law.
Cheers
What if the curve is no longer symmetrical?
The above is simply two hand drawn curves to visually represent the problem that enhanced oil extraction technologies will probably create. The black curve is oil extraction as Hubbert expected it. Both curves have approximately the same area under them (i.e. the same total URR). The red curve is oil extraction with enhanced recovery techniques underway. It is my opinion that the rise in usage of horizontal wells plus the "fast extraction" mindset predominant in offshore wells will both combine to create the red shaped curve.
Outstanding GreyZone,
The simplicity, for those that understand such areas, is worth at least 1000 words. I know because I've tried to lay out the same idea in text. I do horizontals and fast track production ops so I get your point. My biggest concern is that you skewed curve may prove to be optimistic. For years I've heard that Saudi has been pulling Ghawar too fast. Their horizontal redevelopment in the 90's may have pushed back water cut for a while but it will return with a vengence one day. The question is when. I've had others explain the sudden rise in depletion rate at Cantarell is a result of PEMEX puling the wells so hard that they are prematurely coning the injected nitrogen far sooner then the models had predicted. If Ghawar hits a similar tipping point in the next few years your steep slope may turn into more of a cliff.
If we believe the official UK Government predictions BERR predictions, the red curve matches North Sea output - it peaked at about 75% of expected URR.
Bingo.
The Hubbert curve may well be a special case, predicated on being embedded within a larger system which is still expanding. When you start getting into "export land" considerations, "receding horizons", and abrupt paradigm shifts in human attitude and action (thresholds for hoarding behavior, resource wars,etc). I see no reason that global supply will necessarily fit any smooth curve.
Caution, this roller-coaster still under construction.
I created a interactive tool which can be downloaded to visualize this effect. This tool also allows instant Hubbert Linearization of your currently configured scenario. I invite everyone to really see with their own eyes the full range of future profiles.
Peak oil modeling application
Neat tool.
I can't seem to change the peak date and some of the other settings. Are some of them hard wired?
Cheers
ccpo, changing the sliders should adjust the projected production curve, thus the peak date. Feel free to contact me by the email on the download page if something is not working correctly.
Let's start sawing away at the cord now.
Even if all of that oil is recoverable, it shifts massive amounts of wealth out of the country. We're effectively taking the savings of generations and shoving out of the tailpipe.
T. Boone Pickens has his notion; a notion that incidentally would make him richer than he is now. I have a different one, even though I like the wind turbine part of his scheme.
We can replace ALL of the US liquid fuel that we currently use with biofuel from algae. Really. It would take ~8 million acres of desert land to do it, and de-esterization plants to process the oil.
Check out this link.
http://www.valcent.net/i/misc/Vertigro/index.html
This would work, and the infrastructure we have doesn't have to be altered in any cataclysmic way.
Now, will the lobbies allow it?......
Despite all the press, I suspect practical biodiesel from algae is a long way off. First off, all the "designer algae" crowd that have to grow their algae in plastic tubes will have immense upfront hardware costs per unit of algae produced. Second, economically separating algae from water and getting the oil out of the algae is not easy. Dissolved air flotation, filters, presses, etc. cost a lot of money and use a lot of energy. If oil from algae is ever going to happen commercially it will happen first with algae grown in wastewater or seawater ponds, not big plastic tubes. I would like to see biodiesel from algae, but I am not holding my breath.
HO
thanks for this post ; connecting dots about issues that we can't apply scientific standards to.
i feel u are presenting realities as u say even we on this site don't want to acknowledge.
yes the immediate profit motive will drive quick fixes & we might get a little more time.
u'r point about horizontal wells has always seemed to be a 'joker card' waiting to be played. BTW when did horizontal wells get to be standard?
as jeffvail & davebygolly says above ground factors will dominate in many places at some point. human/social/geopolitical factors will be huge.
hoarding/hoteling[dave did a post on this], exportland modeling, scarcity of rigs & investment projection problems , as detailed above are all negative to supply. when i think of positives to supply i am only thinking that some smaller wells quickly , many more of them [than say the US did timewise] brought on line due to high oil prices. i find it difficult to come up with positives for supply with the giant wells declining.
as concerning/depressing as this is we need our best guesses because it makes a difference - like do i buy an electric car conversion kit, gasoline woodsplitter, how mobile should my close family/friends be, etc.
anyway thanks for laying out u'r concerns. it gives me hope when feel i can plan closer to the likely realities [that resonate & seem sensible to me] we will face ;i. e. "just give me the straight [bad] news- to the best of u'r expertise & i'll take it from there".
HeadingOut is on the right question track. Thanks for this great post. The comment that stands out to me is the one by psomdecerff. Are our current leaders really a bunch of bunglers? It was and continues to be known that GWB is a lightweight, and that the appointment of Cheney as VP was to make sure an adult was in charge. Do not think for a minute that GWB's father and those that he works with and for do not understand the situation in the executive branch. It seems all the humor and vile heaped upon Cheney is some kind of diversion. He's nobody's fool and he knows exactly was he is doing. So, the first part of psomdecerff's suggestion on ME presence is almost a certainty. The second important point of moving some of our fungible food exports into tradable fuel is harder to specify, maybe it was just a stumbe into ethanol production to satisfy the ADM and Cargill agricultural giants and the mid-west farmers, and has now been recognized as a good strategic ploy. Letting the world's poor starve to keep the gas flowing our way is unethical, of course, but I'm sure we pay experts at the CIA and DIA and likely agencies that we don't even know about to plot and plan such scenarios, then run them on computer programs.
A rule of thumb being that if you could think of it, somebody else even smarter and more diabolical than you has also. Maybe even a tag team, well paid.
ABOUT OIL DECLINE RATES
HO, this is an interesting subject which I think there will take a long time before the last word is uttered.
The graph above shows the oil (crude oil) production development for the Norwegian Troll field from January 1999 to April 2008 where oil is extracted from a thin oil layering zone beneath the natural gas. The operator Norsk Hydro (now StatoilHydro) wrote themselves into the oil history with golden letters for this accomplishment as it was long believed that this oil would never become economical to develop. The oil is mainly extracted by horizontal wells. Troll was for a period the largest oil producer on NCS with a peak at above 400 kb/d.
The graph above shows the development in year over year growth/decline rates (blue dots connected with blue line) for the same period with a smoothed 12 months moving average.
The diagram should (hopefully) illustrate the irregular behavior of the decline rate with time, where it initially accelerates and reached an average decline rate of 20 %+ for some time (black dots connected by black line), and then the decline decelerated and is presently around 12 % on an annual basis. The reason for this may be infill wells, increased natural gas injection or combinations.
The point is to illustrate that the behavior of decline rates are hard to predict and it seems like the owners and the authorities was caught by surprise about this development (ref also Cantarell). This introduces a set of uncertainties in predicting future flow rates from large fields.
Now, try to accumulate these effects for all the global fields and it should not be hard to imagine that the future could offer some surprises when it comes to global oil extraction.
interesting. what else is known about the field ? and what is the timing of the horizontal drilling ?
As a relatively new member I’m just wondering if I could ask the assembled experts on this site their opinion on the likely near term outcome for world production & it’s effect on oil prices. Assuming that the above stated decline rates continue at the predicated pace when will we have $200, $300 & $400 oil? What’s the highest oil price that the industilized nations can handle before they disintegrate? Basically what I want to know is how many years have we got? 3? 4? 5? I would like to asume for a moment that we will not be rescued either by technology or competent world leadership. Abvously no one can know for sure & I realize that not every body in the peak oil community is even sure that we have peaked yet (2005 any body?) but I would really apricate some feed back from the oil poepole & regulars.
China has 1.75 trillion dollar reserves, and they can pay 400 dollars per barrel.
They likely exchange dollar reserves with oil and other finite resources as fast as they can, because of dollar worth less in the future.
Europe and Japan can pay much more, then US, because it more fuel efficient countries and they have large trade surplus.
US likely go bankrupt firstly and discharge oil demand for more efficient countries.
Price is a function of supply versus demand. Right now supply is constrained but demand wants to rise. Since it cannot rise due to constrained supply, price rises instead - pure econ 101 behavior.
A key question in deriving when we hit $200, $300, or $400 for a barrel of oil is knowing or accurately predicting demand. But demand is dependent on other things in addition to the raw supply. Demand is predicated upon the overall state of the economy, for instance, so entering a recession (or a depression) could lower demand anywhere from a bit to a large amount. Lower demand would either stabilize or lower prices.
So there is no clear cut answer to your question. You can build scenarios and extrapolate based on various criteria but if any of your criteria turn out to be wrong, your scenario will not be accurate.
Now, to give you some opinions on the matter, consider that we have been on a crude oil production plateau since 2004 and that the plateau itself is pretty flat at around 72-73 mbpd. (That's just crude oil. The other stuff making up the other 13-14 mbpd of our global 85 mbpd fossil fuel habit is "all liquids" and includes NGLs, biofuels, tar sands, etc.) Given that we have sat on that plateau now for 4 years (July 2004 is where I mark the plateau beginning with the main part of the plateau being May 2005 to now), it is looking increasingly likely that we are at or very, very near peak oil. All the problems you have seen to date have occurred with oil just as plentiful as it was in 2004.
Key questions whose answers remain unclear are:
1. What will future demand look like?
2. What is the average future decline rate?
Accurate answers to those two questions will go a long way (although not all the way) towards developing a picture of what sort of situation the world will encounter. But again, that remains a scenario, not the actuality, until we really get to those points.
Hey hey Tremain,
First, GreyZone's comments are dead on. Second, Lots of people here at TOD have commented this year that things are happening faster than they had expected, so gauging the time frames is difficult.
But for what it's worth. Oil prices have been increasing 6% a month which puts oil at $200 at the end of the year, gas at about $6 a gallon and diesel at a premium over gas. If the trend holds then oil will reach $300 around August of 2009 and $400 January of 2010. Bear in mind that this is exponential growth and peak oil should teach you that exponential growth can't continue for ever.
Next question, What's the highest price or the price that breaks the back of developed nations? I don't think it works that way. It's not the absolute price, it's the rate of change that's going to get us. Imagine a fantasy world that is exactly the same as our present world except that oil is produced in any quantity demanded but the price increases 1% a year, ignore inflation. We would have colonies on Mars before we stopped driving cars. At that rate of change $200 oil would be a footnote instead of a headline.
So the question becomes what rate is going to get us? Or maybe, How long can we hold it together at the present rate? Well, we are already starting to lose it, people are falling behind on their credit card and car payments, airlines are downsizing. A recession has already started and it is going to continue and then it is going to get worse. The rise in oil prices was an anomaly then an issue then a problem. Right now it is a crisis though few realize it.
The Long Emergency has already begun. How it unfolds from this point is the subject of much speculation.
this is entirely not true. why must we ignore ELECTRICITY? this alternative fuel is already working it's way into the automotive world with the success of the Prius and the announcement of many new electric car projects.
This clearly shows that markets are working.
http://news.yahoo.com/s/nm/20080710/us_nm/toyota_dc_1
the Highlander gets 18/24 mpg and the Prius gets 48/45.
It is a good thing that nobody is dependent on fossil fuels to create electricity.
Pardon my ignorance, but I thought coal was a fossil fuel.
let's deal with peak oil first, huh? studies show that we could move a significant number of cars to the grid w/o building tons of new power plants.
there are many different options that are also good options when it comes to producing energy that is not derived from fossil fuels. wind, solar, CSP, geothermal and of course there is always conservation.
I have seen other reports that the "grid" itself is in terrible shape and unprepared for the load that would result from charging a bunch of battery-powered cars.
It was not long ago that a huge portion of N America was ina multi-day blackout due to grid failure.
I can say that the lights are back on.
as far as the grid being in terrible shape.
Pacific National Lab's Surprising PHEV Study Released
http://www.calcars.org/calcars-news/657.html
you can see calcar's felix cramer driving around in his plug-in hybrid charged from his solar panels.
http://youtube.com/watch?v=7BvaFjdNl-E
We are not short of baseload power to recharge electric cars. We are short of peaking power for air conditioning during the day. If we start building electric cars we will eventually, in ten years or so, need to build more baseloand power plants to charge them at night, and those same baseload power plants will be available during the day to offset air conditioning loads.
Electric cars flatten power consumption.
John15,
If you believe that the markets work and are working right now and will continue to work in the future then why are you here? If everything is going to be fine and the market will solve peak oil easy as pie then why are you spending so much time on us Luddites?
I've never said everything was going to be fine, I've said exactly the opposite. I am here to learn how to lessen the shock of peak oil for myself, family and to get news.
Sorry John15,
I apologize. It seemed to me that you trying to convince people that the market will right all wrongs. I'll be nice from now on.
Heading Out - thank you for this entry. Your comment set me thinking. I have been reading my late father's diaries from the time of the first two oil shocks in the 70s. It's clear from what he wrote then (and from my own memories even though I was a typically self-centred teen at the time) that at that time there WAS fairly widespread awareness of the energy problem and the then widely held view that oil was "running out".
Millions of people saw Carter's Moral Equivalent of War broadcast or read about it in the papers. The Club of Rome had reported (and been misunderstood). This was it. The oil would all be gone in 30 years. There are one or two entries in my father's diary, especially those speculating on relocalisation, that I could lift verbatim and post here today and not many people would spot that they were written 35 years ago.
To a much greater extent than now, there was a pervasive view in the media that the world really was in trouble. Of course, the effects of the oil embargo amplified the message. This was England in the mid-70s: power cuts, queues at petrol stations, endless strikes, worn-out industries with ossified management, glam rockers (The Sweet! That's how bad it was).
Just like today, I guess most people's primary attention was directed towards more obvious targets than the insidious threat of terminal resource depletion. They blamed the Government, the trade unions, the ruling class, OPEC and so on. By the time of the second oil shock in 1979, I think that a lot of people were hoping that the whole Club of Rome thing would hurry up and happen, as oil dependency was getting to be more trouble than it was worth.
Then came the 1980s, the oil glut and the eternal goodness of greed. There was a brilliant post on TOD a while back (which I can't find), about how a whole bunch of people missed the chance to live large and get rich in the 80s because they really believed after the 70s that The End of the World As We Know It was still just around the corner. My dad was one of those people.
Now when I talk to people of my parents' generation about Peak Oil, they look at me tolerantly and say, “Yes, yes. That's exactly what we thought 30 years ago. They said the oil would all be gone by the end of the century but after a few years it was cheaper than ever. I hear that we've got enough left to last at least 40 years even at the rate people use it today. You'll see. Don't worry.”
The Boomer generation has experienced several such apparent reversals of incipient bad fortune. World War III didn't break out. The cities weren't nuked. The new Ice Age (that's in the diary too) didn't happen: they got the opposite - global warming. The oil age didn't end: they got cheap cars and cheaper air travel instead.
There lies the tragedy of the last 25 years. We (in inverted commas) passed up the chance to build a sustainable non-fossil energy system while we still had time to do it. Instead we just p*ss*d away irreplaceable energy. But now almost no one in power or in the media dares warn that this time we're up against the real deal, because last time it patently wasn't.
OTH today's high oil prices are beginning to force people to confront some realities. Here is a refreshingly honest snip from an opinion piece by a car fleet manager in a UK trade publication this week:
(I'm NOT suggesting that PO is just a transport thing, BTW, far from it. It just happens to be the business I work in).
But here's someone who recognises that he faces a totally unprecedented problem, though he doesn't understand what's driving it and, more importantly, what he needs to do in response. Right now he's hoping it will go away - fair enough, I would too if I were in his position - but next year when petrol does hit £2 a litre he'll be in the Practical Issues of Transition boat along with the rest of us.
I've got his email address. Should I send him a primer on Peak Oil?
You aren't the first person that has claimed that in 1978 there were documented claims that as you put it "the oil would be gone by 2008". RC covers this territory. Why not provide some evidence, because I am very skeptical on these claims. Hubbert never claimed the oil would be gone by 2008, so where exactly did your Dad come up with this one?
There weren't statements by anyone claiming to be authoritative. It was simply a general perception. With the benefit of hindsight we know that the 70's oil crises were "geo-political", but at the time that wasn't so clear - even where this was recognized, it was assumed that very high prices would continue (which they would have, had OPEC been able to manage it).
Paradoxically, the 70's "energy crisis" caused an influx of new supply, and a great deal of efficiency and conservation, precisely because people thought this was a long-term problem. If everyone had thought prices would crash in the 80's, no one would have acted as decisively as they did.
As a result, many people got burned. Oil companies invested in projects that didn't pay off. Individuals "relocalized" and forewent children, in anticipation of resource poverty that never arrived.
It's simply not realistic to dismiss the question "what about another 80's style bubble and crash?" by saying that people should have known back then that things weren't that bad.
it was supply and demand too.
Sure. OPEC couldn't have pulled off a price increase if the US hadn't peaked.
The point is, it wouldn't have happened without decisions by KSA and Iran to curtail supply. With the benefit of hindsight people today wonder what all the fuss was about. The point is, the end of the 80's oil price bubble wasn't anticipated, and people were saying things that sound very, very similar to what we're saying here.
"Predictions are hard, especially when they're about the future." (Yogi Berra).
I've put some further thoughts on this here. I'd be delighted to get feedback from anyone interested.
I left a comment on your blog.
Hope it gets to be popular!
Rgds,
Thanks!
yes they could have because commodities were in a general up trend that started in the middle 1960s. the OPEC embargo didn't set off oil prices or inflation.
Could you elaborate? Do you have data?
I don't see the connection between a general commodity uptrend, and the 70's spike in oil prices.
the US had legislated silver out of our coins and Nixon closed the gold window all before the oil embargo. this was because of inflation.
I also remember lots of newspaper/magazine articles in late '70s talking about how oil is going to run out in just 30 or 40 years. Not in fringe publications, mind you, but in magazines like Time and Newsweek.
Using the data that was available in the '70s that was a good estimate. We have better data now and as PO further defines itself we will have better data still. We are speculating that many fields will follow this or that curve but until they do, we don't know. However, one thing we do know is that crude in the light/sweet variety is getting quite limited.
There have been discussions about host countries witholding oil in the ground more or less saving it for future generations. Is that what we are doing by NOT drilling offshore, ANWAR, etc?
I am a doomer and and IMHO after the time of chaos even a little oil will be appreciated.
It could be that they we looking at numbers similar to the beginning of Stuart's reserve history figure here: http://www.theoildrum.com/story/2006/4/26/18109/8251#more
If you calculate with smaller reserves then you get a closer date. Of course, 40 years from the mid-seventies is 2015, when may here say we'll be in clear decline. So, maybe they were not so far off back then.
Chris
Actually, it was 1974/5. I'd ask him where he got the idea - but I need a ouija board :-).
Where ever it came from, it's there, in his handwriting. I'm 99% sure he'd never heard of Hubbert - all kinds of people have published estimates of the projected longevity of oil reserves down the years so he might have got it from an article in the Guardian or New Statesman, a TV documentary - almost anything.
Limits to Growth came out in 1972 and, as has been discussed on TOD, has been widely misunderstood and misrepresented ever since. A lot of people right from the start thought the authors were saying that they'd worked out that civilisation would tip into a resource-depleted, overpopulated nightmare in around three decades' time.
All I'm saying, in the context of HeadingOut's theme, is that there was a time when a substantial minority of people, in the UK at least, (compared with the minuscule minority who are aware of PO) were conscious of impending limits to growth and consumption. Awareness was undoubtedly helped by the fact that the oil embargo had wreaked havoc on business as usual.
By 1977, people all over the world had heard Jimmy Carter say this:
"... our energy problem is worse tonight than it was in 1973 or a few weeks ago in the dead of winter. It is worse because more waste has occurred, and more time has passed by without our planning for the future. And it will get worse every day until we act.
"The oil and natural gas we rely on for 75 percent of our energy are running out." (My emphasis)
What does that say to the man in the street (or in my dad's case, the man in the office typing up his diary when he should have been working)? Enquiring minds can read the rest of Carter's speech here:
http://www.pbs.org/wgbh/amex/carter/filmmore/ps_energy.html
But I'd bet that 90% of listeners simply took away the idea that the Pres was saying that oil and gas were running out. Of course, the 1980s only seemed to prove that anyone who'd actually believed Carter was a chump; a nickel plated loser.
That's why, in my view, no G8 or G12 leader is going to call Peak Oil until it is firmly and undeniably in the rear view mirror. That may seem incredibly frustrating for PO-aware people who see every passing day, as one in which, as Carter said: "..more waste has occurred, and more time has passed by without our planning for the future. And it will get worse every day until we act." But the whole 70s/80s thing means we're stuffed on that score.
What's actually happening is that Brown, Sarkozy and the rest are having to grovel to the oil producers for cash. Whimpering to the Saudis for money isn't Brown's cup of tea but right now it's probably more effective than breaking PO live on TV. Yesterday I learned of the probable effects of some innocuous-sounding changes to UK corporation tax next year. If true, the average CO2 emissions, and therefore fuel consumption of new vehicles bought by businesses (around 60% of new sales) will fall dramatically, quite apart from the growing impact of high fuel prices.
In hindsight, we should have used all that cheap oil to dig yellowcake out of the ground, mine and refine nickle (for stainless), and build nuclear power plants. We could have also used cheap oil to build more coal mines, build wind mills, solar cells, etc.
So now that cheap oil is gone, we will have to use EXPENSIVE oil to do all of those things.
Also, instead of spending the last 25 years saber rattling, we could have acted like a super power and confiscated nuclear weapons from all but the 5 original nuclear powers. But we didn't. Now every podunk dictator wants nuclear weapons, making nuclear power very dicey.
Probably what we need is a depression deeper than the 1930's to give mankind a little humility, since none exists present day, except in dirt poor countries.
Rising energy prices tend to coincide with rising prices for other commodities. mining needs expensive oil. silver and gold topped out in 1980 right along with oil. if what you said were true gold would have hit it's highs when oil was at $10 in 2000 instead of hitting it's highs right along with oil in 1980. I understand what you're saying, but energy prices and commoditiy prices tend to move at the same time.
"....but energy prices and commoditiy prices tend to move at the same time."
You are correct, regarding DIRECTION. In magnitude, however, oil has gone up way too much for the financial well being of miners. For example, gold and silver are up about 300% from the 2001 low, while oil is up about 1200% from that point.
Other metals are generally in between those markers, with a lot of them up in the 500% to 600% area.
Commodities, including gold, should move in lockstep with oil, since their selling price is usually tied closely to the marginal cost of production, plus a small premium. The fact that they are lagging oil is a sign of peak oil problems distorting the market.
Another thing distorting the market is historically low interest rates and the tidal wave of fiat money sloshing around the globe as America's trade defict dollar total grows and grows. pipefit
mining will just cease and that will drive up the price of that commodity to where it's economic to mine at high oil prices.
YES! this is the exact type of thinking that we need to solve the problem, that we have a permenant problem that we can't overcome. that's how we get conservation.
it's the reverse of a top in housing and stock markets. at the top nobody thinks stocks or housing will ever go down. that's the sort of mania needed to get into a bear market. you've described the type of thinking that was a top in the energy markets and a bottom in paper assets. a mania in thinking that things will not get better.
You have repeatedly likened the current runup in oil prices to the tech bubble of the late '90s and the housing bubble of late. I think the differences are stark and obvious even to a casual observer. The stock market bubble in tech stocks was the result of fraudsters and an army of marketers who bought into the BS they were selling. Tech stock shares were trading at insanely high P/E ratios, but nobody ever gave it too much thought. Except your pal Cramer. All talk of the "new business economy" was insane. Stocks kept going higher but most of the new tech firms weren't making any money. That's a bubble.
The housing bubble was caused by lax government regulation that allowed bankers and mortgage lenders to collude in an easy-credit scam that suckered people into buying houses they could never afford. There was money to be made even though there wasn't a chance in hell those loans would ever be repaid. When the merry-go-round stopped the housing market began to crash and we're in the middle of it now. The correction will bring prices back to the historical norm where if your income is X you can afford a mortgage for Y. The home-equity ATM machine is closed. End of bubble.
The current situation with oil is a fundamental supply-and-demand problem. Demand continues to go up and so does the price. When scarcity sets in the price accelerates upward. Unlike those other 2 bubbles there is no artificial hocus-pocus going on with the current state of oil prices. Failure to appreciate the underlying reasons why they are different is not a virtue.
Oil is like widgets, doncha know? Just crank out some more oil widgets and all will be fine. Saved once again by the magic of the market. Yes, oil will eventually come down. But many of us may be dead by that time, or really, really broke. If all you have a hammer, everything looks like a nail.
You might send him a link. Can't do much harm.
I remember the first oil crisis, being born in 1950.
Having read some of the books and having had a long standing interest in demographics, I was very open to the idea presented, and thought that we were knackered.
When I came to check in more detail though, a lot of the detail of the arguments seemed weak.
I remember 'Limits to Growth' for instance had figures for when we were supposed to run low on iron!
Apologies if that is not an accurate representation of the arguments there, but I read it 30 years ago and have no access to a copy.
In any case, I am talking here about my reaction and recollection.
If they had made a narrower case then in my view they would have been more persuasive - as helium, for instance, has much more practical limits.
Gradually I came to the conclusion that many of the problems mentioned could be dealt with - but only if we had enough energy.
I came across 'Energy or Extinction' by Fred Hoyle, who argued that renewables were impractical and we needed thorium CANDU reactors to be built out rapidly.
Delays in building any nuclear plants frustrated me, but the chief thing that I missed was that oil production would not phase out very gradually and smoothly, but would basically fall off a cliff.
The technology has moved on since the early 70's, and solar at least seems to show more promise than he allowed for.
On wind power the jury is still out as his argument was basically one of low EROI, that an advanced technological civilisation could not support itself on such a diffuse energy source.
It still seems to me that we have sufficient technology to make it, and eventually perhaps find our way to a much lower population living very well, but time presses and politics and inertia may do for us.
I am aghast (but not surprised) you don't have more than a passing knowledge of Limits to Growth.
I strongly recommend you invest in a copy.
For now you can start with this.
A Synopsis of Limits to Growth: The 30 Year Update
there is a paradox at work here though. everything we have is dependent on oil, correct? look around you then. if everything you have is thanks to oil, the oil is still there. the oil used to ship the chair you are sitting on. the oil used to ship your computer. the oil used to build up the internet infrastructure and so on. the challenge is what, how and how much to maintain.
What do you mean the oil is still there? I think you are getting mystical on us.
the chair you're sitting in. oil was used to cut down the wood, deliver it to market, produce, ship it and get it to your home. it's gone, but it's not. it's been converted from a tree to a chair in your home. as long as the chair last is how long you used the oil.
John,
The chair I am sitting on is a heavy steel office chair made in China for IKEA and bought in Bristol. The embodied energy in it is huge. Millions of such chairs are thrown away every year.
A lot of the energy in my chair is transport energy, used to ship the ore, the coal, the chair itself. Because ICEs are inefficient, most of the energy was wasted as heat and greenhouse gas emissions.
If I was at home, I would be sitting on an early Victorian oak, cane-seated chair. Almost no oil in it and probably precious little coal. It was made in England, in a rural workshop and may possibly only have travelled by horse-drawn or hand-drawn transport until sometime in the 20th century.
Moreover, it is quite possible that, where the tree from which the wooden chair was made once stood, there now stands another oak tree.
The gallons (I guess) of oil in my office chair will never be replaced. The chair could be melted down and made into something else - but only at the cost of using another large slug of energy from, currently, mostly fossil sources. (The wooden chair could be recycled using hand tools, if push came to shove).
The joke is on us. Cheap oil was used to build a ludicrously inefficient, vastly energy-hungry, utterly unsustainable world.
Instead of 30 years to find a balance between the world of my office chair and the world of the Victorian wooden one, we've got three or five. Not a snowflake's chance in Hell, as they say.
I like your optimism about shifting to sustainably-powered EVs etc, but the truth is that the last 25 years have ruined any chance of doing that.
At BEST we will be lucky to get through to a situation where people will count themselves lucky to be able to afford a nice new wooden chair, let alone a Prius.
At worst...count to 6.5 billion, look at the infrastructure, take away cheap energy and do the math.
And there I would disagree with him, because I remain critically concerned, as Euan is, that the world does not really understand the size of the problem that is approaching, and the speed of that arrival.
The world, and most of the countries in the world are increasing their populations. The world and its countries see no problem approaching. They not only expect there to be enough fossil fuels for their existing population, they expect that in the future there will be enough fossil fuels for their larger population. As I have said before, the first step in solving a problem (per AA I believe) is to realize that you have one. Right now the first step has yet to be accomplished virtually everywhere. There are exceptions, like France, with its massive nuclear energy program started after the first oil shock, and its program to electrify all their trains, including their freight trains.
if you look at what's happening, china seems to be well aware of their energy problems. however, their growing economy doesn't use as much oil per capita as the west does. declining per capita usage in the west leaves more of the energy pie for the east. the east uses a lot less energy per capita than the west. for every american who drives less or doesn't buy an SUV there is an Asian person who can buy a scooter.
China is basing much of its future economy on the auto and are building the thousands of miles of highway to accomodate it. This will radically increase their oil per capita. You are looking at the present, but aren't looking at the tremendous increases in auto purchases and the rapid growth of their middle class. If this continues, we are screwed regardless of what paltry savings we may make in the west. They are building a new coal plant a week.
China will run out of money and will not be able to recover their investments, if the world can not afford to purchase their products. Western assets are being drained away by high energy prices and inflation without that money flowing to China. It will all come crashing down if the price of food and fuel keep rising.
The world has consumed roughly half of nature’s endowment of 2000 GB of crude oil in the last 100 years. If Hubbert’s peak oil theory is correct, we are about to enter a period of decline in crude oil production. Many of the views expressed here suggest that the decline rate could be fast, indeed much faster than the growth rate. Is it possible? The implication is that the remaining 1000 Gb of crude oil would be consumed at a precipitous decline rate, after 10-20 years of production plateau. Please provide me with an example of this highly asymmetric crude oil production profile from any of the oil producing regions of the world? I have not seen any. A few years of plateau, followed by around 1 % per annum decline in production for decades to come is much more likely. I am sure the world would be able to cope with that.
You can actually search this site yourself.
OPEC World Oil Outlook 2008 just released and shows OPEC crude oil in decline to 2012
http://www.opec.org/library/world%20oil%20outlook/WorldOilOutlook08.htm
On page 37, OPEC crude oil production was 31.6 mbd for 2006.
The latest IEA report says that OPEC crude production for June 2008 increased to 32.4 mbd.
http://omrpublic.iea.org/
Also on page 37, OPEC forecasts its crude production to decline to 30.9 mbd in 2012. This medium term forecast to 2012 is explained on page 36: "The medium-term assessment benefits from an extensive database of over 250 upstream projects, focusing upon the incremental volume from newly developed fields and the net decline in existing fields".
Some USGS magic happens next. OPEC crude production is forecast to increase by a huge 11.2 mbd from June 2008 to 43.6 mbd in 2030. How is this calculated? See page 36 again: "For long-term supply projections, the resource base is taken into account, using the mean estimates from the US Geological Survey (USGS) of ultimately recoverable reserves (URR)". If that's not convincing then read Box 1.1 on page 39: "Indeed, USGS estimates of ultimately recoverable reserves have practically doubled since the early 1980s, from just 1,700 billion barrels to over 3,300 billion barrels, while cumulative production during this period has been less than one-third of this increase...It is clear, however that the USGS’s work provides one of the most comprehensive analyses of world petroleum resources, and in fact, the organization’s most recent 2000 assessment has been shown to adhere to a rather conservative viewpoint."
Here is the link to that overoptimistic USGS 2000 report with URR 3,300 Gb (oil & NGL) which is about 900 Gb overstated.
http://pubs.usgs.gov/dds/dds-060/
Here is the criticism of USGS 2000 report by Jean Laherrere.
http://www.oilcrisis.com/laherrere/usgs2000/
It bemuses me that OPEC continues to rely upon the USGS 2000 study to forecast OPEC's own oil production. I would think that the OPEC countries would easily have a far better understanding of their own basins than would the USGS. The only reason that OPEC continues to use USGS reserve estimates, rather than their own estimates, is that it allows OPEC to tell a story which is in their own interests.
It is mentioned that "if world production is around 86 million barrels a day, then to replace existing declines next year, an additional new production of 4.47 mbd at 5.2% decline, instead of the 3.87 mbd required at 4.5% decline, will be needed just to stabilize supply at a fixed level."
Instead of looking for additional new production alone to make up for this decline, the OECD countries including Japan, as well as China and India should immediately form a think tank to finalise a strategy to make up this decline by alternate energy sources such as wind, solar, bio-fuels, non-grain based Ethanol etc. Then the Heads of State should sit down togethaer to fix country-wise targets in each segment of alternate fuels.
The OECD countries should provide support to India and if needed to China, in terms of technology and investment to meet their targets.
Otherwise by next year we will still be talking about production decline and when the Oil will hit $400/500 per barrel.
I agree. Colin Campbell also agrees as he has revised his peak total liquids (excluding biofuels) forward from 2010 to 2008 at 85.3 mbd.
http://www.aspo-ireland.org/index.cfm?page=viewNewsletterArticle&id=49
My updated total liquids forecast has not changed significantly and indicates a peak of 86.6 mbd in 2008 (including biofuels).
Supply, Demand and Price to 2012 - click to enlarge
The most significant part of total liquids is crude and condensate production which has been updated below for the recent EIA data release http://www.eia.doe.gov/ipm/supply.html
The drop from March to April is due mainly to temporary production drops from Nigeria and Saudi Arabia.
Crude & Condensate to 2012 - click to enlarge
The long term crude and condensate forecast is below.
Crude & Condensate to 2100 - click to enlarge
I need a chart like the one above but with future estimated oil demand in it as well. i saw a good one couple a days ago, but i have trouble finding it again. Can someone give me a link please.
kristofer,
Would you like a chart showing an increasing or decreasing demand? Both are available out there. I'm not really teasing you. To some degree we have a collective idea of what oil availability will be in the near term future. I still suggest that demand destruction may play an even more significant role. The late 70's price spike drove demand down 10 million bopd and led to $10/bbl oil in 1986. That’s how severe demand destruction can be. It's not a guess or a model...that's what actually happened.
Predicting future oil prices will depend upon the rate of demand destruction vs. the rate of declining productivity. Declining productivity is a factor now unlike the period of the mid 80's. Saudi flooded the market with cheap oil then so they could recover their market share. There might not be a similar motivation this time around. The numbers just came out: Saudi et al have made a net income through June this year almost equivalent to their entire income for 2007. I've always felt that Saudi would adjust oil prices to prevent another global recession and avoid the price crash similar to 1986. But I'm not so sure now. Even if demand destruction is significant they may be able to sell less oil but maintain an acceptable income as long as someone can buy enough of their oil at the higher price.
Bottom line: draw your own demand curve. I think you'll have a much chance to guess right as any "expert" out there. Even though we all talk about $140 oil, prices only averaged around half that for 2007. IMHO, we haven’t really begun to see the true reaction of the world economy to $140 oil yet. But it’s coming. The global economy moves very slow compared to these discussions about it. But it is also very slow to change directions once it's heading a certain way. We can pick this chat up in 12 months and see how demand looks at that time.
I'll get your point. But wouldn't a great demand destruction today have a greater impact to world economy than it had in the 70:ties. World Economy are larger today. We also have a lifestyle that make us more dependent on oil than we had in the 70:ties. The world are more populated. Today we also have new participants in game as China, India, Russia and in some way also Africa.
But my main concern. If oil price get stable due to an demand destruction. How can the developed world destruct demand today without having a severe impact on our economy and thereby everything in our society.
If I had to guess you're probably right about the greater complexity of the global economy now. And yes...such severe demand destruction would have a great negative impact. But the impact severity depends on how you weather the decline. I read reports that many millions of deaths were attributed to the demand collapse in the third world. But just the opposite in the US: we came through the bust relatively unhurt and the following low oil price period was responsible for one of the greatest growth periods in US history.
But my big unknown is how the proximity (if we aren't there yet) to PO will change our economic profile as we go forward. It goes back to the big unknown as far as I'm concerned: the rate of demand destruction vs. PO production decline rate. We could be heading into an economic environment never seen before: declining US/global economy with high or even increasing oil prices. Your basic mega stagflation scenario for the world and maybe us too. I can predict the probability of such a future. But I also don't think anyone else can. Just too many big variables that can't be pinned down with any certainty.
I'm beginning to wonder whether there could be a new kind of oil wealth recycling, with the ME oil producers investing some of the huge profits from $140 oil in developing renewable energy in the large importing nations. Profit from the peak and also own the long term substitutes for oil, kind of thing.
Such a move would help the customers to afford high oil price more easily (because they wouldn't have to find all the money for solar, wind and nuke infrastructure). The oil producers need to maintain high prices to dampen demand so they can eke out their declining fields longer, while still profiting handsomely.
The old argument that OPEC will resist anything that encourages customers to turn to alternatives to oil doesn't hold post-Peak. The customers will have to go for alternatives anyway, and OPEC can either help them stay on their feet by profit sharing or watch them crash faster with all the risks of chaos and retaliation.
Note that this is not a panacea for peak oil, only a suggestion for a way to perhaps achieve an orderly retreat from BAU 2008-style to a much less energy intensive way of life through a supplier-customer partnership. It also favours OECD customers more than developing countries, which would suffer from high prices while being last in the queue for investment and a share of the shrinking pool of oil.
First time I saw this suggested was in UK premier Gordon Brown's address to last month's oil summit in Jeddah. Guess it's a variant of the "give someone a fish vs giving them a fishing rod" argument. Dead customers are no use to anyone.
"I'm beginning to wonder whether there could be a new kind of oil wealth recycling, with the ME oil producers investing some of the huge profits from $140 oil in developing renewable energy"
I think it's inevitable. Renewables are capital intensive, and oil exporters have to recycle petrodollars. Petrodollar recycling has been the key to managing oil crises since 1973.
BTW, I enjoyed your post on my blog, and I replied to it.
"His remark implies that the much of the debate over peak oil is perhaps over. And there I would disagree with him, because I remain critically concerned, as Euan is, that the world does not really understand the size of the problem that is approaching, and the speed of that arrival."
Perhaps what Deffeyes means by the "debate over peak oil is perhaps over" is that sufficient knowledge and understanding may exist to indicate irrefutably that the global petroleum resource is past cumulative peak production. How leadership responds to this reality is, apparently and unfortunately, an entirely separate domain.
Agreed, as I walk past empty restaurants on a weekday evening, and up drop in for a pint in an empty
pub in order to ponder which of the 50% discount offers in the shops i should take advantage of,
before returning home to open and carefully discard the 6 offers of loans and credit that sit
in my mailbox, I remain continually amazed that inspite of being surrounded by evidence,
the discussion hasn't even begun as to why this is actually happening, let alone what
to do about it.
I say to my colleagues .. Peak Oil = economic contraction = no new money = bloody disaster
and the response is ... do you think energy changing supplier would help ?
After two years of trying to answer as best i can I'm coming to the conclusion that my stock
response should be:
" just find a doctor who's happy to prescribe valium."
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