Natural Gas and Credit Situation - Nate Hagens Interview on Global Public Media

Nate's interview on the Reality Report from December 29 is now available from Global Public Media. I think it is very good. According to the write-up:

In this edition of The Reality Report host Jason Bradford interviews Nate Hagens. In a show broadcast over a year ago Nate described the financial deleveraging process and how this could lead to commodity deflation, including "$50 oil."

Topics in this program highlight how the current financial melt down and impact the timing and severity of peak oil and natural gas--including the dreaded "natural gas cliff" as rigs go idle due to low prices. We discuss whether this means economic growth now over, and if so, how should societies adjust?

This is a link to the site where you can download or stream the talk. It is about 50 minutes long. (Per Jason: If you could ask TOD readers for help with GPM transcription services that would be handy. If interested/able they can contact

"Dreaded" was not my choice of words, but this situation is a)very concerning and b) very beneath consensus energy radar.

Some friends at Johnson Rice and Co are helping me with some data (with intent for Jon Friese or David Murphy to come up with updated EROI analysis on US nat gas). But the above (preliminary) graph, shows well feet drilled and cost per foot. With production flat, this is very concerning, especially given a)that we are scraping source rock to get this gas and b)commodity prices are low vis-a-vis the cost rise.

The serious questions are;
1)when do we hit energy break even on NG?
2)what price for NG can North Americans afford?

Clearly at 'some' price, we can extract more gas - but how many other resources and people will be employed in nat gas industry at that point? EROI tells us how much natural capital surplus we have available for economic (or uneconomic) work. Similar ratios can be estimated for other limiting inputs – Energy Return on Water Invested, Energy Return on Land invested, etc. As net energy declines, it stands to reason that the Energy return on NON-ENERGY inputs will decline faster. (examples are going from concentrated light sweet oil fields to tar sands, needing both more land, and water inputs – ditto with biofuels.) Marcellus Shale has water permit limitations, etc.

The interesting part of this analysis is many of the newer wells are horizontal as opposed to straight vertical - this means they cover a much larger area and the 'straw' has a whole lot more sucking power.

Natural Gas - copasetic until it's not.

Copasetic, also spelled copacetic, copesetic or - less commonly - kopasetic, means very satisfactory or acceptable.

Copasetic is an unusual English language word in that it is one of the few words of seemingly unknown origin that is not considered slang in contemporary usage. It is used almost exclusively in North America, and is said to have been first widely publicized in communications between the astronauts and Mission Control of the Apollo Program in the 1960s

/No, I didn't know either

My mother used it when I was a kid in the 40s and early 50s. I didn't realize it's an unusual word.

The english word 'cope' derives from ancient latin french 'colper', strike a blow. I think it quite possible, that confronted with the english usage of 'to cope', american french speakers would use 'il sait couper' as 'he knows how to cope'. From there, a 'latin' adjectival derivation such as 'copasetic' could be imagined.
I think it is much more likely though, that southern blacks invented this word, using the english root with a latin inflection. They needed to cope, and whatever helps to cope is copasetic.

Hello Nate & Jason,

Great interview, Kudos!

Nate's Quote above: "The interesting part of this analysis is many of the newer wells are horizontal as opposed to straight vertical - this means they cover a much larger area and the 'straw' has a whole lot more sucking power."

Applied to your Red Queen treadmill analogy: this means not only does the treadmill need to go ever faster to offset the superstraw depletion, but the surface area of the treadmill needs to constantly increase too. Picture the treadmill going from 2 feet wide to 5 feet, then 10 feet, and so on. Yikes!

For example, let's say 20 years they only needed to annually drill the surface area of 1,000 square miles [with short vertical footage] to get one trillion cubic feet [TCF] of gas. Maybe today with the multi-mile superstraw multilateral horizontals: they are now forced to annually gobble up 5,000 square miles of surface area to get the same 1 TCF. Next up: 10,000 sq miles for 1 TCF-->pretty soon there is no place else to drill and/or you cannot lay pipeline fast enough to get the natgas to market.

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

To be a bit nitpicky, if the answer to serious question 1) is soon, then no need to bother with 2). :)

When my wife gets off the other computer, I'll listen to the interview.

The EIA says we are going to have 24 TCF by 2030 of domestic production. Unsaid is that each of the 500 million americans at that point would have to be multimillionaires to afford the gas. Aggregate energy gain (gas, oil, coal, etc.) powers society. The myopic focus on 'reserves' as opposed to flow rates and affordability will be our energy achilles heel in retrospect. Ironically a cold winter will further mask this situation as higher degree heating days will offset lower industrial demand and keep prices firm, pushing back the rig drop to the summer.

Make no mistake. Physically there is an enormous amount of natural gas - but pipeline cancellations (due to credit and low prices), increased need for compression (and thereby higher cost and higher energy use), etc. and deeper, more land and water intensive production methods make natural gas a more pressing danger than oil, IMO.

As noted above, we're going to work this up into a post.

Next Monday on Reality Report 12-1 EST -Jason will be interviewing Bill McKibben - fyi.

Fantastic interview Nate.

Also when it comes to understanding the difference between "reserves" versus the suck-it-through-a-bunch-of-thin-straws "production" rate and the post suck decline rates, I suspect that even a lot of TODders don't get it. Definitely the cornucopians who talk about 3 trillion bbl "proved" reserves don't get it.
(Left click on picture to see cone sucker.}

Nate -- I'm not sure if a colder then usual heating season will necessarily push back the drop in rig count until summer. I can't speak for other operators but we're one of the biggest unconventional NG players. Last November we cut our 2009 budget from $1.4 billion to less then $700 million. We've already started the process of dropping 40% of our rigs. Granted we can quickly change that plan with a reversal of management's position should we see a sudden strengthening of NG prices.

But my interpretation of the situation is that factors other then price played a role in the decision. As your chart shows, the rapid escalation in drilling costs were cutting deeply into the bottom line. Nothing brings down the day rates faster then a drilling contractor looking out of his office window at a bunch of rigs stacked in the yard. The same holds true for US Steel, Halliburton and all the other peripheral suppliers. Another factor may have been credit costs. Though we have a good credit line the plan is to drill from cash flow only. I believe avoiding credit costs was just one way of mitigating the pricing uncertainty. With the anticipated drop in drilling costs for 2009, wells drilled this year (though perhaps fewer than 2008) may generate a significantly better return even if NG prices average somewhat lower.

I also suspect the company wanted to take advantage of their depressed stock value (we’re down almost 50% from the 12 month high). Even before oil/NG prices began a serious slide the energy stocks took a big hit along with the rest of the stock market. If we stay with our reduced budget we may not replace 2009 production. As many point out, the steep decline rates of the UNG wells force companies into an ever expanding drilling effort to provide y-o-y reserve growth. I’m sure every UNG operator has been looking over his shoulder for the day when he couldn’t physically drill enough wells to offset declines. Stockholders would not respond well to such a development. But given the economic down turn and associated demand destruction, companies may essentially get a “pass card” for not replacing reserves this year. In fact, many shareholders may look favorably upon efforts to increase per well profits over increasing reserve volumes that come at a very high cost.

You bring up an interesting observation -one that I've started to puzzle through a bit - the 'stock market' has only dictated the practices of nat gas producers (in large fashion) since the late 1990s. In the 1970s and 1980s companies would go out and do their best on their leases, properties, reserves, etc. Now, with large institutional followers, wall st analysts, etc. EACH quarter is analyzed and scrutinized for how it compares QoQ and YoY. Drilling/production decisions in the best long term interests of the land and resource are often discarded in attempt to 'prove up' and produce an ever increasing amount of product. The pressure to perform RIGHT NOW probably has accelerated what we see coming as a 'cliff'. I'd love to hear from those in the industry any info or opinions on this hypothesis...(Rockman, etc.)

Not an hypothesis at all Nate. It's a fact that has been beaten into the staff of every public oil for at least the last 15 years. And it has been due, in part, to the industry recognition of PO. We've never called it has always been the reserve replacement issue. Since at least the early 90's most established companies have acknowledged, at least internally, that they would have great difficulty in the future replacing reserves via the drill bit. I spent much of my efforts during the 90's working production acquisitions. Very quickly a company's valuation was based upon y-o-y growth almost to the exclusion of profitability. I assisted in the acquisition of many fields which were bought at or close to their net value. It often mattered little if the property eventually yielded a positive rate of return or not. Y-o-y growth was the sole motive. In an odd way, financing of acquisitions during this time took on an aroma similar to the sub prime mortgage fiasco we’ve just witnessed. It was even worse at times: one client acquired another public oil I valued at $16 million for a total cost of $43 million (cash, stock and debt). The client was a micro-cap and needed the acquisition (any acquisition) in order to supply its market maker with sizzle to sell the public. The effort worked so well that the company became a target of a successful hostile take over by a very well know Wall Street raider. It was like watching two men fight over the right to captain the Titanic. Within 2 years the aggressor lost his butt as the true value of the acquisition became obvious. Such efforts played no small part in my personal decision to slide from such work towards the operations side of the business. Sort of like the old joke about how watching sausage being made can cause you to loose your appetite for it.

This growth at the cost of profitability has continued up to and including the price spike last summer. Chesapeake, Petrohawk, et al did major acquisitions at premium prices (thanks to the ultimate bullish oil market). Now those companies are struggling to maintain viability. They did achieve the primary goal: increase booked asset VOLUMES. Booked asset VALUE has, of course, tanked. But companies are generally given a free pass to some degree since they cannot control pricing. An interesting change to valuation is about to take place though. I don’t have the details at hand, but I’ve seen reports re: changes in SEC rules. Normally oil/NG is valued based upon the closing price on 31 Dec of each year. Not a pretty number last year. But now companies will be required to use a yearly average number (calculation method unknown by me). Even more significant for the unconventional NG players: proved reserves can now be booked based upon “analogous wells” as opposed to standard volumetric analysis. Unconventional NG reservoirs cannot really be analyzed with such standard approaches. That’s one reason they are called “unconventional’. It’s virtually impossible to calculate the inplace reserves because they are invisible to our standard tools. But once such a well has established its production decline it’s rather simple to project its ultimate recovery. But now an operator can take proven success from offset wells and apply them to an undrilled location. Depending upon the distance reach of such analysis the UNG players could see a huge increase in “proven” NG volumes. If these new rules are effective for 2009, though many operators may see a significant decline in drilling activity combined with the continued hyperbolic decline of existing production, they may actually show significant increases in y-o-y proven volume increases. And that still is, as far as I can tell, the primary goal of virtually all public companies.

since the late 1990s. In the 1970s and 1980s companies would go out and do their best on their leases, properties, reserves, etc.

Which is what ROCKMAN is suggesting his company returns to:

Though we have a good credit line the plan is to drill from cash flow only.

Ultimately, that leads to public companies going private, doesn't it? It implies a change of scale and a change of management prioritites and practices that doesn't fit the current 'stock market'. Patient capital. The institutional investors are going to have to start looking at performance of companies, not the performance of stocks.

It fits into what I've been thinking about "pay it forward". A move to cash flow and savings to finance investment. We alive now pay for investments, not generations to come. I wonder if eliminating long term credit and debt might not be an important part of getting to sustainability.

cfm in Gray, ME

I hadn't thought much about privatization of certain companies Dryki. But it's an interesting thought. It would likely never be cheaper to do so during the next year. If one used PO as a motive to be so bullish it might sell. Supposedly there is a gazillion $'s out there looking for a relatively safe home that can earn them more then the tarnished Treasuries.

It's been written many times that the ultimate big winners are those who take the gamble to buy big during the low side of a cycle. All it would take is a barrel of guts and a few hundred billion $'s.

Isn't the long-term impact of a drilling turn-down also related to the time off-line for the rigs? I know in decades past that early in the turn-down people got layed off and equipment companies lined up the gear. After a year, those companies sold gear and/or went bust, and some equipment disappeared permanently, as did the people who knew how to use it. After a while longer more went into disrepair or got sold for scrap and nobody cared. When demand grew again, there was no equipment, no workers, and not much of a support industry.

If the downturn in drilling is short, the equipment will still be available (and at a good price point), workers will be quickly regained and trained (and many will have stayed out of work, so salaries will be lower), and even if some of the support companies have folded others will be hungry and ready to grow.

I would think these factors, along with the fast-depletion curve of NG gas wells, will tend to create a fast-cycle oscillation in supply/price of about 18 months or 2 years. As field depletion sets in, or oil heads back up, NG prices will trend upwards as well though.

Am I wrong?

That would be my rough guess too Paleo. Over my 30+ years these cycles seem to keep getting shorter. The problem with pin pointing the timing is the continued demand destruction (especially commercial NG usage) vs. the future production declines. I can hope matters swing back to increased activity by 1Q 2010 but that's as much wishful thinking as a calculted guess. On a personal level, I'm glad I'll be swinging back to Deep Water GOM projects this spring. The DW takes much longer to respond in the slow down cycles. But if low prices persist for a couple of years+ then we'll start slowing up significantly out in the water too.

"The myopic focus on 'reserves' as opposed to flow rates and affordability will be our energy achilles heel in retrospect."

i'm having a little trouble with that statement. and imo, the myopia is in choosing either or, reserves or flow rate. you just cant have one without the other.
the physics of a dry gas reservoir are well understood, and i will state it here: pv=znRT. p, pressure, on the left hand side of the equation is the main factor determining flow rate and n, moles of gas, on the rh side is reserves(period). well, make that reserves =f(n).

and how you gonna achieve a non zero flow rate without reserves?

on one hand if the solution to our impending ng "crisis" is all in flow rate, then by all means drill baby drill. and what will be drilled are those 80% per year declining shale gas wells.
and on the other hand, there are sizable "conventional" gas deposits in alaska, just waiting for a pipeline to turn them into reserves. there are also sizable "reserves" via conservation, and as far as i can tell the only way to access those "reserves" is via high(er) ng prices. screw affordability.

that was my point. Energy gain is the driver of social democracy. Once we reach low EROI on NEW oil and gas, rising prices will divert resources away from non-energy sectors - the 'cushion' in the society will be gone - and the high prices necessary to 'drill baby drill' won't be paid by anyone (except perhaps governments, which is I suspect the path we will go)..(but it will still be money paying for energy instead of vice versa)

My main point is necessary prices to attain IEA/EIA production levels will never be affordable in a declining aggregate EROI environment. If we are flush with terawatts of wind/wave and solar energy gain, then it perhaps can be so.

"Energy gain is the driver of social democracy." Excellent, yes, but in order to gain energy, two things must increase: flow rate, and infrastructure to handle the flow rate. The energy grows and the physical infrastructure grows.

There is a parallel to the increase in energy and resource flows involved as a child reaches adolescence or adulthood, and is no longer a recipient of authoritarian parental rule, but may now make rules her/himself.

But the energy and resource flow levels are relative to surrounding infrastructure needs as well. Think "Lord Of The Flies".


I suggest generating the same chart with cost per foot corrected for inflation.

Cost per foot in the late 70s may be comparable to today's costs.

Paul in Nevada

"Energy is what we have to spend, not money. Money is just who has the energy." - Nate Hagens speaking with Jason Bradford, on the Reality Report.

I'd like to nominate that for a top right quote at TOD.

FWIW: I've downloaded twice and played on two players - I'm consistently getting "phasing" and garbled sound at several spots in the program. Anyone else? Is there a clean version?

cfm thinking laterally and craving isolation in Gray, ME

Yes, I am getting garbled sound. I've only tried one player, though. A little later I shall try another player.

Yeah, sound keeps cutting out.

Yeah, me too. I thought it my player.

Sorry folks, we will try to get another one uploaded. This happens sometimes and is usually not a problem with the master copy, just the version that the server gets.

Glad the interview turned out well, in general. I was really tired on this show as I had to get up very early and drive over 2 hours to get to the studio in time as I was out of town, and get this--no caffeine available when arrived! Good thing Nate had to do most of the talking.

Countries affected by Russia-Ukraine gas dispute

for czech republic only 40 average winter day remaining

If I look at the BP Statistical Review of World Energy 2008, the reserves-to-production ratio for North America is 10,3 which to me anyway looks like there's an imminent collapse in gas production around the corner...

has this been posted ?

"chesapeake energy defies sceptics"

chesapeake sold nearly 100 bcf of reserves for about $4/mcf. wonder if they will have to show this as a hedging gain/loss in future reportings. seems like a sara palin choice.

There aren't enough details to tell if Chesapeake deserves a pat on the back or not. Selling 100 bcf of NG for $4/mcf if they spent $5/mcf to develop those reserves isn't much to brag about. But those numbers are hard enough to determine even within the company. OTOH, it was my instinctive feeling that the market over reacted negatively to the Chesapeake Prez loosing his butt on his personal stock acquisitions. His failed optimism wasn't a true reflection of the company's real value IMO.

As far as whether the company acquiring those assets got a good deal or not: some years ago I watched an initial stock offering used to purchase a reserve base for $240 million. About a year later those same reserves were written down to $40 million and the IPO buyers were burned to death. Such is life in the world of production acquisition and fast talking Wall Street peddlers.

great work nate, & jason. many thanks!

The interview is cram packed with good stuff.

I'm less hopeful than you about Obama. Of course he's smart, but even if he had the best intentions in the world, he's severely boxed in. He wouldn't dare go too far off track.

MBAs, yes. Plus we have layers and layers of superfluous employment, almost totally parasitic. Insurance, real estate, marketing, gov't bureaucracies, medical bureaucracy. And now the ballooning security industry to keep on eye on those driven nuts by the other bureaucrats.

Plus I got an even more alarming picture of the NG situation than I had before.

And of course hiking in the woods. That's as close as I get to a religious experience. But my wife hikes with me, which is good, because she keeps track of where we are. I don't want the complete religious experience of starving in the woods.

Typically Nate and I start off with some topical subject, such as the natural gas cliff or loan default rates, and then use it as a way to get into "Deep Thought" mode.

I agree with davebygolly's dis-optimism about Obama.
We are dealing here with a most deeply entrenched "religion" (paradigm), of growth imagined to be the outcome of intellectual/technological progress when in reality it has been only progress in the exploitation of fossil fuels. It is almost impossible for individuals who have grown up in awe of such a paradigm to escape from it in middle age or later. It is even harder when there are whole institutions, indeed a whole 'establishment' of such individuals ruled by faith in that paradigm.

These people are like a captain of a Titanic who will drive relentlessly onward to the iceberg because they believe they are unsinkable (just another business cycle etc). Only at the picking up of the pieces will power pass to those who think outside the defunct paradigm to newer ideas. (Sorry I haven't proved this with any equations, but quite a lot of precedent seems to support it.)

You'd probably like my essay on this subject:

You'd probably like my essay on this subject:

I liked your other things but not that one.
I don’t write articles about oilfield tech or farming because I’m not particularly knowledgeable about them. Psychology seems to be exempt from this principle.
Jason’s “Neurobiology of mass delusion” makes no reference to either neurons or biology. Like so many semi-competent psychology ventures it confuses together several distinct factors and ways in which people fail to be realistic.

Some important dimensions of individual differences are involved. Firstly authoritarian mentality, which is a collection of innate mental tendencies which are biologically-advantageous but intellectually-disadvantageous. Autistics are lowest on this. Secondly neuroticism (N), which is the tendency/ability to unthink (doubt) one’s assumptions. Most people tend to get stuck with whatever ideas they first encounter and are unable to unthink them when presented with new conflicting information. Low-neuroticism persons are especially rigid in this way, and consequently tend to unwarranted confidence. As they get older they get increasingly derailed in their thinking, whereas high-N individuals have the capability of increasing wisdom with age (subject to the emotional problem below).

Factors in failure to grasp reality:

(1) Blind faith in “authoritative” claims (high in authoritarian mentality).
The presumed expert or leader tells us something, and we just trust it. The high-A individual judges and defines truth as what the expert reveals, and that’s that.

(2) Self-serving crooks (especially high-authoritarians)
Persons with low authoritarian mentality constantly ask “Is this true or is it false?”. High authoritarism persons wouldn’t know what the truth was if it hit them on the nose; instead they are preoccupied with “Is this to my advantage, or disadvantage?”. They believe whatever is convenient for them to believe. They don’t need to be insincere in this sliminess.
Two examples. Tony Blair’s case for invading Iraq. And a burglar who told me it was alright for him to commit burglaries because his victims had insurance anyway. At least the burglar wasn’t rationalising a war crime when not under duress.

(2B) Bloody liars. I published a theory of autism which remains entirely unchallenged. Distinguished “experts” on autism (with honourable exception of Bernard Rimland) would prefer not to have to acknowledge that mere me has upstaged them. So they write reviews of the literature which don’t even mention my published theory and instead tell the lie that autism remains a puzzling mystery. Yes Prof Simon Baron-Cohen that includes you.

(3) Low-N (neuroticism) individuals
A lot of people assertively declaim that on 9-11 the WTC towers and WTC7 were controlled-demolished by bombs. And that those who say otherwise are fools or liars. There’s ample evidence on the web to disprove their half-baked theses (for instance the screw loose change video), but they just carry on as if it did not exist. This may be partly due to authoritarian conformity (1 above) and or that they first took in the demolition theory and are thereafter unable to unthink it.

(4) High-N individuals
I tell my mother and brother that there is highly likely to be a major breakdown of the food supply system. And that it therefore makes sense to stock food. To which she always says can we talk about something nicer please. That’s not because she doesn’t understand or believe what I said. It’s because the implications are emotionally intolerable. She’s lived in her village for many decades, and even if she did stock a ton of food, she would still be in a village full of others who would be starving. And she and my brother would be too kind to say to them well we only have enough for ourselves.
This is high-N (neuroticism) people actively avoiding all attention to a distressing problem, not quite the same thing as the sort of denialists you encounter at the TOD site, who DO focus attention on an issue. (It is actually a form of neurotic (in this case phobic) behaviour.)

(5) Major paradigm-shifts.
When a massive unthinking-rethinking exercise is called for, it strains even the capacities of the majority of people, not just the low-N aforementioned. Most people are in my experience far too low-N anyway (especially males).

(6-7) "Delusion".
There's also wishfulthinking and there's also the paranoia and other delusions associated with psychosis. But this would only become "mass delusion" if there were some serious toxin poisoning them.

In any actual instance there is liable to be a combination of these different factors. The folk-psychology concept of “in denial” I find to be a fairly useless melange. It at best provides an ad hominem argument, in other words of little value!

Thanks for your reply. Interesting categories you have there. Please expand somewhere, e.g., autism and liars is very interesting. The ability to fool oneself and others and the consequences of lacking that capacity is fascinating.

From your reply, I am not sure if I misinterpreted something in my essay or simply oversimplified? True, I didn't go into a discussion of the dopamine pathway, but in terms of biology I discuss evolutionary constraints briefly in the context of the fright response and delayed relay to the neocortex.

I am not sure I agree with the semantics of limiting "delusion" to some toxic psychosis. What's wrong with mass delusion being the simple inability of social groups to face an unpleasant reality?

If this is your specialty would you care to write a TOD article about belief systems and social change or lack thereof?

"What's wrong with mass delusion being the simple inability of social groups to face an unpleasant reality?"

Perhaps what you mean is "What's wrong with mass delusion being DEFINED AS the simple inability of social groups to face an unpleasant reality?"

In that case then firstly social groups don't have one mind, one inability. A group consists of a collection of individuals with varying dis/abilities.

Secondly, big deal! you've defined your term. But quite what causality is there behind "the simple inability"? I've listed some of the factors/processes and most of them would not be a good use of the word 'delusion'.

[This was a reply I meant to post but accidentally forgot and later sent the one above instead.]
Gosh, that was quick. Unfortunately I'm not very clever at reading and don't understand half of your reply! Re writing an article I am very ill from unremoved dental amalgams and not sure I have the time/energy (even my autism theory update-review remains asided for years).
Perhaps you should beware of wordism (eg. "delusion"). Psychology is especially plagued by wordism because its terminology has so often taken on non-specialist meanings (you "idiot"!).

[Clarification: By wordism I mean a common tendency to unconsciously assume that for every word in use there is one corresponding concept (and not none or two).] An example of a word with very diverging meanings is "intelligence". An example of two words meaning exactly the same is fast and speedy. There are even some terms which don't correspond with any real concept, such as "moderate Muslim" (since by definition all Muslims have to consider the Qur'an 59:2-7 enthusiasm for terrorism and theft to be the flawless unchangeable revelation of Allah).
Another term which has no real concept associated with it is "intrinsic value"; a thing can only have value to the extent that there is a valuer granting it some value, hence there can be no such thing as intrinsic value.]

I find this utterly meaningless:
"What's wrong with mass delusion being the simple inability of social groups to face an unpleasant reality?"

What's wrong with [an undefined term] being [an undefined mechanism or process]? Or what's wrong with 1+1=1+1?

While I rush off to get to the corporate store, I was wondering if you can point me/us to any details of those farming tools like that thing with three tines and a wheel. (Probably could go on a spot on the Mendocino post.)

Jason and Robin,

Like both of you, I find neurobiology and human response to Peak Oil to be a fascinating topic.

(My initial foray into PO was not focused on the question of will PO happen. Of course it will happen! Rather, I was stunned by the observation that "their eyes glaze over" when you tell them. I couldn't understand why.)

Like both of you, I am an amateur in this neurobiology field and do not pretend in anyway to have the bona fides of an expert.

However, I find that throwing out cliche answers like "mass delusion" are quite unhelpful and only work to delude us into believing we understand.

The human brain is an incredibly complex organism. Scientists are just on the cusp of coming to grips with how it works.

Certainly the human mind is pliable and changed by messages it receives from the outside, including messages received from the mass media (MSM).

Also it appears well established that the human mind is constantly running many adaptive models in the background with all these models trying to seek out the truth or reality of what is going on in the outer world and to filter away information that appears to be not useful or taking away from the prime tasks at hand. (Jason's example of the gorilla walking past on the basketball court is an example. A better example is the adult mind being able to discard the notion that the boogey man is hiding under our beds when we fall asleep at night.)

For those of us who have Peak Oil as one of the primary models running in the back of our heads, the world and its "reality" appear very differently than for those who have Adam Smith economics (for example) as one of the primary models running in the back of their heads. It is not a mass "delusion" but rather a mass-accepted model of how the world is put together. They call our model a "delusion" and we call their model a "delusion". But in the end they are all just background models trying to approximate what is going on and predict what will happen next.

Whether or not I'm an amateur (and the most notable scientists have been non-professionals), I'm certainly no dilettante in having had a number of unchallenged papers published and being a lot more competent in my specialities that just about all the profs.
But the human brain is the most incomprehensibly complex of all subjects and there are no real all-round experts, only gropers towards expertise.

I was stunned by the observation that "their eyes glaze over" when you tell them.

This happens if you start an unsolicited "lecture" about anything, (it's not specific to energy crisis). It evokes a kneejerk "I'm being propagandised/talked down to" reaction!
The effective way to get through to people is to appeal to their self-concept of being intelligent, thoughtful, rational, curious people (even though they're not!).
You discuss on the basis that they may be just as or more knowledgeable than you.
You ask them questions.
"Have you got fire insurance?"
"Are you envisaging to be alive in five years time?"
"Would you agree it would be a good idea to know what's going to happen?"
"Would you say the government are forever putting short-term concerns ahead of longer-term concerns?"
"Would you expect the government to tell you the truth if it has caused problems with its short-term opportunism?"
"Where would you get your information from?"
"What do you think about xxx?"
Etc (continued elsewhere).

You can look into tool sets at:

Look for broad fork and wheel hoe.

Hope you feel better soon.

I am not a linguist but my head spins when trying to follow your dissection of my use of language. I happen to be an expert in certain kinds of biology and within that realm can delve into the nuances of meaning of terms (e.g., what does an evolutionary biologist mean by "adaptation"). But when I step outside of that world then it becomes an amorphous gestalt of what I sense is the common understanding of words and whatever I can also check up on in the dictionary. Of course, meanings evolve and aren't the same for everybody and all communication is imprecise. I can't see a way around that!

Thanks Jason for tools info.
I don't so much feel ill as being very incapacitated mentally. But far less so than 20-40 years ago when my memory was so impaired I could barely put a sentence together, or read one. The academic system defines intellectual excellence rigidly in terms of parrotting ability so this toxicity relegates me to trash-bin status despite half a dozen major unchallenged published papers.

The way round the confusion of meanings is that before using a term one first ensures the reader/listener is told what meaning is intended. For instance "I shall here be using the term extelligaciousness in the standard ID sense of tendency to make emotional molehills out of situational mountains (as measured on the EXT scale, Clarke 2009)".
That's exactly the same as in maths where any meaningful exposition begins by telling you that f means Newtons of force, m means Kg of mass and a means m/s2 of acceleration before dazzling you with f=ma.

deeply entrenched "religion" (paradigm), of growth imagined to be the outcome of intellectual/technological progress when in reality it has been only progress in the exploitation of fossil fuels.

That's not exactly true.

There have been tremendous advancements in many specialized fields: medicine, electronics (cell phones, computers, internet), software, etc.

The key word is "specialized" as in "specialized fields". That's the way Adam Smith free marketism works. Each specializes in his own field of endeavor.

The problem is that few have the time or incentive to "step back" and see the bigger picture --including the one that shows population overshoot and resource depletion.

Each specialist assumes "the other guy" is taking care of the overlooked externalities.

It is fully understandable that a specialist in being President (i.e. Obama) would expect his detail men to take care of the details.

Of course, he hasn't appointed a falls-between-the-cracks department head because the government does not have a Falls-Between-the-Cracks Department (a.k.a. the FBC).

And you need one before you can have one. /paradox

That's not exactly true.

But it's a lot truer than you're assuming.

There have been tremendous advancements in many specialized fields: medicine, electronics (cell phones, computers, internet), software, etc.

And all those things were only made possible by a fossil-fueled industry and will almost entirely die after its collapse.

And most of the technological advances can be run on electricity and we can have plenty of electricity withouth fossil fuels.

Magnus - whether you are right or not in respect of the future I don't see as clear; it would be good to study it further elsewhere.
But I think the point still stands in respect of how we got here, that these things as of up to now have all depended on fossil fuels to produce (not least the globalised production/expertise society).

And hopefully you're inviting us all to come to Sweden to share the hydropower!

'but quite a lot of precedent seems to support it'

and so it does. The haves and the have-nots have always fought, ever since what we were doing divided people into those who have, and those who haven't. Up till now, those who have won, while does who haven't gained important concessions from those who have.
It is conceivable, that the 'haves' lose credibility to a degree that have-nots could get a big enough stake in the decision system to swing the system about.
History,even though it mostly happened through times where growth was more or less axiomatic, does provide some clues.
Poverty stricken people do not revolt; first, they seek sustenance. When sustenance is not forthcoming, then they revolt.
Educated classes revolt when the expected returns do not match their investment of time and money into their education.
Thus are revolutions made: anger from the lower class, combining with anger from the middle class. The lower class will strive towards more egalitarian distribution, the middle class 'leaders' will strive towards regaining some of the privileges they expected to inherit.
and so it goes.

After I analyzed the Canadian situation I had been hoping for US data, so thanks for this!

One fascinating part of this graph is how in the late 70's drilling costs rose following an increased drilling effort. But in late 90's the cost ramped up before effort ramped up. Essentially we were seeing the setup for the 2001 peak a few years early. Hindsight is 2020 but it is interesting that if we had another region to watch, we could probably see this same thing happen again. That might be useful to your friends who were kind enough to provide the data.

Any word on a transcript?

I finally heard your talk, very well done.

I was hoping for more analysis of natural gas, but the comments in this thread provide a good fill-in.

I find myself keying on 2 comments, one at the start and one at the end which link back through each other.

You initially mention a fear of the next great personal "atm" being the 401K's and the retirement savings of people. In my observations, this has started in earnest already, started in large measure by their recent extreme devaluation. That was hard earned money that went poof, and the thought is, spend it before it's gone completely.

You conclude with an admonition to "live for today". Many, I think, will be much more intent on just this. Although the financial stories this month seem to focusing on consumers cutting back their spending, many will soon be living like the grasshoppers, the lifestyle of the ant pushed aside.