Thursday Open Thread...

Has anyone read the Jeremy Leggett piece from the Independent (UK) yet? Update [2006-1-27 1:29:0 by Prof. Goose]: And there's this BBC piece out there too.
I have a question for Stuart or anyone who would like to help...

Do most fields in production use secondary or tertiary techniques, and how long after 50% of the reserve is gone, can they keep production at or near peak levels?

For instance, could most fields be 60-70% depleted and still be producing at or near peak levels?


I hope Stuart has a chance to answer. I haven't sent him an email because I don't want to seem too pushy. After all, it's only been 60 hours since I first posted the questions in Wednesday's thread.

Maybe TOD could do an entire blog on technology's effect on global peak of crude production. Or if you've done this already, I'd love to have a link. I searched for about 45 minutes and didn't find what I was looking for. I'll look again I guess.

Did Simmons talk about this in his book?


Simmons does cover it, a bit.

He does not believe technology increases total recovery.  In fact, he believes the exact opposite.  High tech methods increase production short-term, but decrease total recovery.  At least for most oil fields (there are a few exceptions, depending on geology).

I'm not an oilman, Zach, but I've just trawled through my links and these seem possibly useful places to read / search:

You could browse the archives of this site:

You have been very patient, it is an important question both for the amount we can actually recover and for the effects it will have on subsequent depletion rates. I, too, look forward to the comments of our more expert folks here.

(Unrelated) During my search I stumbled on this article:
which discusses price and demand elasticity, GDP and economic effects, etc. Since there's been a good deal of discussion about such things here lately I thought it worth posting, it looks interesting but I have only given it a cursory glance so far.

Thanks guys for your help. I'm going to look over those links and try to find the answers.

In the meantime, I hope Stuart at least acknowledges my post before Ghawar is empty! :)

As far, I have a feeling (i haven't done much reading on it, other than the link Agric posted) that gasoline demand becomes more inelastic the higher the price gets: the higher it gets, the more people that can afford the higher prices are priced out of the market.

Why does Stuart have to acknowledge your posts? You seems to asking be a fairly basic, if important, question. Instead of making an effort to research it yourself, you are demanding that an editor address it. This site has thouands of readers, many who have been here much longer than you. I think it is perfectly acceptable to ask questions, although it is better to try to find answers and contribute yourself. But to insist that a single individual, who spends hundreds of hours of his free time contributing already, reply directly seems selfish and self-important. If I were Stuart, I would ignore you on principle.
With all due respect, Jack, I think you are being a bit hard on poor Zach.  I speak as someone who also went through a bit of a painful learning process about the social dynamics of TOD some months back.  But now I know how things work around here, and I have become a "well-adjusted" member of the TOD community!

Note to Zach: Don't let this disappointment drive you away!

Thanks for your help Phil. I owe you two now...

Wow, Jack. Where to begin...

First, I would like to say that whether it is positive or negative criticism, I welcome it. So thanks! At least I know that you don't find the questions important, which is your opinion and you are of course entitled to it. But, as Agric so eloquently stated, "it is an important question both for the amount we can actually recover and for the effects it will have on subsequent depletion rates. I, too, look forward to the comments of our more expert folks here." I couldn't have said it better myself.

Secondly, everything you have accused me of not doing, or not willing to do, I said I have done or said I would do. Just read my posts sir. I stated that I don't want to appear too pushy and I was not being sarcastic or anything. I am understanding of people's time, especially people who volunteer it on a great site like this (I have been reading TOD since late 2004, just didn't see a need to post. The analysis and commentary was quite thorough.). In fact, Agric saw this and commended me. He obviously meant it.
Thirdly, I would like to concede that singling out Stuart turned out to be a bad idea here at TOD, but it requesting info form specific people works fine on Every Other Blog and Messageboard I've Been To. My 'acknowledgement before Ghawar is empty' statement had a smiley face on the end, indicating that it was a light hearted request and that I was eagerly awaiting a response, not demanding one. pfft.. You miss understood and took it as an opportunity for criticism. Which leads me to my next point.

Fourthly, after Leanan and Agric's very helpful posts you come off as a blog troll who has nothing better to do but criticize and make assumptions about what other people have done or will do. If it was my forum or blog, you'd have Strike 1 of 3.

Have a nice day and thank you all again for your help.

I thought I might have been a bit tough after reading reading PhilRelig's post above. However, this comment has confirmed my initial impression. If this was your blog, I wouldn't be reading it and doubt anyone else would either.
It should have read, "As far as price and demand elasticity,"


Jack is the Oil Drum's drill-sergeant and resident lawyer. He was trying to shape Zach's inherent brilliance. Nobody better to teach. Get in line, soldiers.
I read it last week when it was first published, Prof. Goose. He takes a decidedly catastrophic tone and I can see why - he focuses on discoveries and they are essentially done, dead, and over. We're never going to find enough 35 million barrel fields to replace Burgan, Cantarell, etc., and do it in a timely enough manner to matter.

However, I remain unconvinced that an advanced technological civilization of some kind cannot be maintained through other energy sources such as nuclear, solar, tidal, wind, etc. I think such a civilization will be very different from the consumptionist manic culture we have now but that's just an opinion.

I just ran into the piece today, so I am still digesting.  Some good summary, some Cassandra as you say.  I will digest it tonight, but I wanted to bring it to everyone's attention.  It was in the Independent after all...
Is the manic part realy so important for our culture that we would have a new civilization if we were using 1/10 of the resources we now use for clothes, toys, long range travel, car commuting, etc.

I do not concider it a change of civilization when we electrified or when cars became cheap to buy and run. Why would a slowdown and more focus on quality, repair, software and manual services be much different?

I do not think we will loose any high tech, the present crisis encourages technological development. I suspect it might give the same kind of focus as the second world war or the cold war.


    Civilization itself may be able to continue through known alternative energy source. What can not be maintained is the 6 billion global population. In another word, there will be a catastrophic massive die off of the population. Once the population is reduced to the level that the available amount of alternative energy can sustain, then things stablize and the civilization continue on, that is, unless an assuring resource war escalate into a nuclear exchange which wipes out civilization itself, then there is no future.

    Why would one be surprise, massive population die off due to resource depletion had happened many times in the human history. It's just that this time it may be the first time it happen on a global scale. So it's un-precendent.

I wonder if our technology would survive a dieoff.  Sometimes it does.  Often, it does not.  Sometimes, after a collapse, the level of complexity drops to way below what it was before "civilization" started.  (I suspect because the environment is so depleted it simply won't support even a relatively low level of complexity any longer.)

If 90% of the population dies, we'll lose an awful lot of knowledge.  Could you build a bicycle or a computer or a solar panel yourself?  From scratch, from refining the metals to construction to installation?  What about if you're struggling to grow enough food to eat in a hostile world?

It is possible, even common, for "advanced" civilizations to lose knowledge.  Even the literate ones, like ancient Egypt. I suspect our complexity will be a disadvantage, not an advantage.  We're all specialists these days.  Without the matrix of civilization around us, our skills are useless.

This is a very important point.  The infrastructure for modern technological society is fragile and would likely unravel under the stress that massive constriction of easily usable energy would entail.  Unfortunately humans take things for granted and assume the status quo will last.
If there is a slow queeze, there may be a quick die-off in weak, third world countries, but I suspect a slower, more prolonged die-off in the major powers, as much of the the middle class loses their jobs and drops into poverty.  There may be riots and insurrections, but I think technology could survive a slow die-off.
I think technology could survive quite some time...but not forever.  Gradually, we would lose it, as it became increasingly unaffordable.  

I actually think that this slow collapse - catabolic collapse - is the worst possible outcome.  Probably the most likely outcome as well.  We would switch to substitutes - coal and nuclear, probably.  At first we would make an effort to maintain safety and environmental standards, but as the going got tougher, our standards would get lower and lower.  

The very worst possible outcome would be Al Gore's nightmare: global warming run amok.  As David Goodstein puts it, the earth is tipped into a condition "incompatible with life."  That would not be entirely in our hands.  Even if we refrain from burning coal, we can't stop China or Russia from doing it.

Even if that doesn't happen, the result of a catabolic collapse would be ugly.  Topsoil stripped, water polluted (if there is any), trees all burned for firewood, plants and animals extinct due to human hunting and farming, chemical and radioactive waste poisoning the land for 100,000 years.  

I think we should aim for sustainability, not maintaining our technology.  Yes, I think the two are mutually exclusive.  No, I don't think many will agree with me.

I think we should aim for sustainability ...

"Sustainabilty" of what?

If we don't keep out modern medical technology, then millions will die from disease. Plagues would spread.
Our modern medical system requires plastics, computers, etc. It relies on the rest of the technology food chain.

If everyone dies (except for a rare few of the "fittest"), that would be "sustainability"?

Medicine for thought.

"Sustainabilty" of what?

Sustainability of the environment.  Because if we don't husband our natural resources, we will have a hard crash - Easter Island times ten.  Maybe not in our lifetimes, but one day.

Our modern medical system requires plastics, computers, etc. It relies on the rest of the technology food chain.

Exactly.  We cannot sustain it.  Not indefinitely.  We have to prepare to do without it.  Heck, even now, good health care is out of reach of most people, including a lot of Americans.

If everyone dies (except for a rare few of the "fittest"), that would be "sustainability"?

Not necessarily.  But reducing our population substantially should be our #1 priority.  Jared Diamond's Collapse is the most interesting when it discusses what it takes to succeed.  To become a truly sustainable society.  And population control is a big part it.  

I'm not saying there has to be a big dieoff, or that we should all go live as hunter-gatherers tomorrow.  But we should consider sustainability when we make choices today.

For we build New Orleans, or don't we?  With sustainability in mind, I say no.  Pay to relocate them elsewhere, rather than using the money to build bigger levees.

Another example: health insurance often pays for Viagra, but not for birth control.  It should be the opposite.

IMO, we should look at alternate energy sources - biofuels, solar, wind, nuclear - as temporary.  They can help us transition to a sustainable society.  But make it clear to people that it is temporary.  That eventually, no one will be putting the powerlines back up after a big storm. Don't lie to them and say one day it will all be back to normal.  

I agree.  I think we're headed for some version of village/tribal life.  There may be an intriguing vestige of what we think of as "technology" surviving - wind, hydro and biomass powered.  Solar will be used for space and water heating, not sure if PV can be maintained for very long.  Of course, stone tools are also "technology".  So "sustainable" will mean just that - we'll find a level of population and technolgy that can be maintained.  How "low" (by our highly biased standard) that will be is unknowable, but it won't be 6.5 billion and we won't be driving cars and jetting about.  What scares (and disgusts) me most is the period of intense fascism I see between here and there.
Why are we going back to a tribal existance?  Nations existed long before oil and coal were used.
read recently that after Bhopal, the people "went back to the village" apparantly this has been done a number of times when civilzations collapse, seems like sense.
 Ideas from J. Bronowski's The Ascent of Man. The step 'above' tribal is the city. The city is the beginning of significant specialization( like bronze craft), so in a major collapse appears the tribal is what we fall back to. I also wonder what advantage a nation gives, other than protecttion by an army, or Maybe a reasource not in a part of the state (Liebreg's law of carrying capacity). Bronoski says roads and communication ( messages) are foundations for nations. Learning to type so short winded.
That sounds like a cue for my 'Levels of Collapse' scale, apologies for those who saw it when posted a few months back:

A couple of years ago I invented this scale as a broad framework for assessing what might be expected. Someday I will probably  devise intermediate points, especially for levels 2, 3 and 4 which I anticipate being the low point of the next 30 years and for which knowledge and skills preservation will be most critical. If anyone knows of similar attempts to devise such a scale I'd be very interested, I've not seen any.

  1. Short term, basic infrastructure and money system remain operational, possible interruptions to electric, gas and water supplies. Less locally devastating than severe floods, earthquakes, storms etc but much more widespread. Many businesses cease operation, significant unemployment. Larger impact than anything in developed countries in last 50 years, worse than 'Great Depression' of 1930s.

  2. Short term, considerable economic dislocation but basic infrastructure and money system (local at least, but probably not at 'normal' value) remain largely intact. Low die off (< 5 to 10% ?) unless widespread lawlessness when it could be higher, perhaps >25% in some dense population areas. Probable need to survive a few weeks or months without normal water / gas / electricity / shopping supplies for a significant proportion of population.

  3. Short term, significant collapse of infrastructure and money but sufficient remains to re-establish pre-existing society if it does fragment and repair most critical damage within months or a few years. Electricity, water, currency value all largely absent for several months, maybe years. Low to medium die off for developed countries, perhaps 20% to 60%. Probably equivalent to go back 40 to 80 years. Most important knowledge probably preserved.

  4. Medium term, most infrastructure, government, money systems fail. Most systems and infrastructure have to be rebuilt locally once the population has learned to survive and feed itself. Medium die off for developed countries, 40% to 80% overall, very variable between urban and country areas, could range from 0% to 95% for different localities. Probably equivalent to go back 100 to 300 years. Significant knowledge lost.

  5. Long term. This is mostly differentiated from medium term by the amount of population, skills, knowledge, that are lost. Major die off for developed countries, 70% to 90%. Go back 500+ years. Most knowledge lost.

  6. Very long term. 90% to 99% human population lost, survival and repopulation first priority. Go back 1000+ years, nearly all knowledge lost.

  7. Re-evolve 1. Human experiment terminated. Go back 1+ million years, apes probably still best bet.

  8. Re-evolve 2. Back to small mammals / reptiles / insects, back 50+ million years.

  9. Unicellular / full restart.

The first two levels are insufficient, of themselves, of providing sufficient 're-adjustment' to solve the resource and other problems we will imminently face, thus it is very likely that further shocks / collapses would follow level 1 and 2 collapses.

A level 2 collapse might hopefully trigger a massive change in human priorities, behavior and intent such that we could avoid anything worse and buy us the time to find solutions - that is my best guess of our best hope. A level 1 collapse is unlikely to be sufficient.

Level 3 or greater collapses will disable countries as functional entities, mostly temporarily in the case of level 3. But local survival becomes the priority for years. Level 3 is the least level of collapse that, of itself, probably makes humanity sustainable beyond this century.

Such destruction of the infrastructure makes me wonder if this idea of yours is the "apocolypse now" scenario for America or merely another criminal bombing campaign on Iraq/Afganistan and soon to be Iran?
It is merely a scale which attempts to quantify notional stages of break down of human and other life on this planet in response to possibly catastropic events which could occur. I'm not trying to say that this or that event will happen or will have specific effects.

One use it could have is to suggest what approaches and preparation may be most appropriate and advantageous should a specific level of collapse be expected. I propose it as a framework within which risks could be assessed and preparations made, nothing more. I am not aware of any other attempts to do this (if you are I would greatly appreciate knowing of them), I think it is a valid and worthwhile area to research.

Agric's scale is an excellent tool for what it was intended, attempting to categorize "what might be expected" under a series of worsening case scenarios. I have personally found it to be very useful.
Presently, my wife and I feel we are prepared for a Category 1 type failure, and are making strides toward getting ready for a Category 2.
Hello all.  Been reading this site for some time now--great source of info.  I have a question--Here and other sites I've read say that in the event of societal collapse there will be a loss of knowledge.  Given that individual knowledge and skills will be lost if there's a die-off, what about all the knowledge in books?  My local library has DIY books on nearly every subject, certainly all those which pertain to self-sufficiency in food production, shelter building, clothing (from care of sheep etc. to spinning, weaving, dying, sewing), animal husbandry, alcohol production, etc. as well as books on art, music, science, math, physics, etc.  And that's just the library.  Are we assuming that all these materials will disappear or that people will be too busy surviving to read and learn from these sources?  I understand that there will certainly be difficulties and individual failures as people try to relearn these skills, but I don't think the knowledge will just disappear.  Maybe someone needs to make the committment to preserve these materials, like the monasteries and convents during the Dark Ages :-)
Books are not immortal, nor are CDs, DVDs, computer disks etc. Unfortunately books can be quickly ravaged by fire, water, damp, mold.

It will depend on how deep the collapse is. Should it reach level 3 or 4 on my scale knowledge preservation will be a very significant objective, possibly the most important determinant of how well we survive and progress thereafter.

While the internet exists in a widespread form the risk of significant knowledge loss should be low. In the run up to major collapse (assuming, though it is probably unwise to do so, that we have reasonable warning) there should be a big effort to acquire, disseminate and safely archive multiple copies of important data.

I expect that, even in the case of profound collapse to level 4, 5 or 6, some computers capable of accessing locally archived data will be possible and some sporadic means of powering them should be available. That would be the most practical way of storing huge amounts of information for a decade or so at least. Books will probably be a more practical way of providing portable copies of frequently useful information but care will need to be given to their use and storage.

Books can be reprinted or, if necessary, copied by hand. Expensive, but that's how we have all the ancient literature we have.
People might end up burning books as fuel to keep from freezing to death.

Maybe someone needs to make the committment to preserve these materials, like the monasteries and convents during the Dark Ages

I think we discussed this in the sci-fi thread.  See "A Canticle For Leibowitz."  ;-)

Seriously, I'm sure some books will survive.  But books alone are not enough.  We need the whole infrastructure of civilization.  Even Einstein could not teach himself physics.  He hated school and got terrible grades, but found he had to go to a university to learn physics.

But in a low-energy world, we won't be able to support many scholars - that is, people who don't produce something tangible.  Now, a farmer can grow enough food to feed a hundred people, freeing the rest of us to specialize in other things.  Only a hundred years ago, it was the opposite: most people grew their own food.  I think that is the model we are heading back to.

I have a request that I hope someone can help me with.  Hopefully, this doesn't sound too strange.  I've been very interested in oil for some time now, and of course the material well-being of my entire life fundamentally depends on it.  

However, the fact of the matter is that I have never actually seen, felt, or smelled the stuff!  (I mean crude oil in its various forms and types, not refined products.)  Is there anyone on here who can possibly help me obtain representative samples of some of the important grades and types?  E.g. West Texas Intermediate, Brent Crude, Venezuela Heavy, etc.?

(After I look at, smell, and touch the stuff, I can then put it in vials and place those on my book shelf to show off to guests - leaving them to scratch their heads, of course, about my wierd and eccentric fixation with oil!)

Interesting request... My dad was in the oil business, and I had some summer jobs in related fields. I remember seeing oil samples on people's desks and things, often sealed inside clear Lucite plastic blocks. I think the oil companies would give them away to employees and clients from time to time. But I don't know of any market for them, I don't know where you would buy them.

Googling around, I did find a couple of sources. You're not going to believe this, but Edgar Cayce, the 20th century psychic, believed in crude oil shampoos. And I found a couple of companies selling raw crude oil for use as a shampoo! Here's one:

I certainly wouldn't put that stuff on my head, I'd worry that it might contain carcinogens, but I guess Cayce has enough followers that some people do it.

Also, I just searched on eBay for "crude oil" and found a few people selling samples. There was one from Alberta and a set of four vials from Saudi Arabia. That sounds like it would be your best source.

16 ounces is an excellent amount for a sample, because it is (by my calculations at least) an "ergamine."  It's the oil-based energy equivalent of one day of hard labor by an adult male.
"Our product is natural Pennsylvania Crude Oil taken fresh from the oil wells in Pennsylvania. This is REAL crude oil with no refinement. It will have a strong oil scent."

I don't doubt it.

Halfin, did you check out the price?  $9.95 for 16 oz = $3343.20 a barrel - not including sales tax!  :-)

I wouldn't put it on my hair either, but some shampoos have pine tar for the scalp.  

For Pete's sake don't spill any in your home, it will stink for eternity.
if you want your oil in a necklace, then here is your site:
dinosaur blood
I havn't seen the stuff itself, but have seen pumpjacks while visiting Oklahoma. As your plane lands at Will Rogers Airport at Oklahoma City, a few hundred meters away from the runways are a pair of pumpjacks. Sometimes they run, sometimes they don't, letting oil seep around in the formation. (near-end-game stripper wells)

As one drives around in Oklahoma, like Texas, you occasionally see pumpjacks, again, not always on. Suffice it to say, that oil province is nearing the finish of depletion.

For about a decade, I got interested in the oil peak thingy, after reading I started looking around (with Google in its infancy) and saw other sites verifying this oil peak thing. While I visited Oklahoma for a separate reason, it was a bit of a pilgrimage about oil depletion. There is a bizarre parallel between OK and TX and the Middle East: There are tons of churches you see from the descending plane. Does the smell of the black fuel cause religious delusion?

If you get some jars of crude samples, keep out of reach of children. Evapourating light hydrocarbons, like solvents, could cause a "glue sniffing" type high. If you get them, please put photos on a web site about oil and the peak.

Good luck!

I've seen pump jacks in western New York.  It's beautiful country.  Green hills and pastures, like New England.  Not like Texas at all.  Must be part of the Pennsylvania oil.  



My first peek at crude oil was a surprise -- it was a strange shade of green.  It was a kind of dull, thick, used-up anti-freeze sort of color.  Not near as irridescent, but a similar shade.

In my short time with Conoco PipeLine ('92 - '98), I came to see that each field has a unique color and consistency.  The 'average' appearance if you will is a dark liquid, somewhat between chocolate syrup and used motor oil.  The viscosity is lower than I would have supposed.  It is less viscous than syrup (in my limited experience).

Guinness!!  Yeah, that's the best example.  It's kinda similar to this Guinness I'm looking at fondly.



Thanks for all the feedback.  Halfin, you provided a good lead with that ebay reference.  I made the mistake of bidding on the four vials of Saudi crude before I discovered a site in the ebay ad itself called (referenced by that seller on ebay) that sells samples of crude oil, source rock, coal, etc.  I paid $19.95 for nine samples of crude oil covering the spectrum from extra light to extra heavy.  The samples are each 4 milliliters.

Another question:  The samples are spoken of as being "stabilized."  What does that mean?

Well, I'm not sure, but generally "stabilized" would mean that the crude oil won't break down, solidify or separate, I think.

One summer in college I worked for a chemistry company that provided services to the oil industry. This was in Odessa, Texas, a big oil-producing region at that time. My job was to assist with some of the analysis of oil samples that came in. The oil had a substantial water cut, but it was all mixed together. They say oil and water don't mix, but I think they add emulsifier to the injected water so that it will mix; this works sort of like soap to "wash" the oil out of the rock and into the area where the well is operating.

I would add some chemical that would de-emulsify them so that we could measure how much was water and how much was oil. Then I would measure the pH of the water and perform some other tests which the oil companies would use to monitor how their wells were performing.

The lesson I drew from this is that even though oil as it comes from the ground looks uniform, it can actually be a mixture of different stuff. My guess is that your "stabilized" samples have either been chemically treated so they won't separate, or they have been processed so you have a uniform material that is inherently stable.

Unless you treat it or seal the container over time the more volatile fractions of the oil evaporate and you're left with sludge.
For those interested, I posted a few simulations on in an tentative to understand the conditions required for a production curve to be a gaussian:

Convergence of the sum of many oil field productions

Science has an article whose authors claim it settles the ethanol debate once and for all:

The study, by UC Berkeley researchers and published today in the journal Science, says earlier studies were wrong to claim ethanol is an ineffective fuel because it takes too much petroleum to produce.

It's one of those "review of literature" things:

The study looked at six earlier studies that attempted to weigh the amount of energy from natural gas, petroleum and other sources used to produce ethanol against the amount of energy in the finished product.

Two of those studies found that producing a gallon of ethanol required more energy than was contained in that ethanol.

But those studies made erroneous assumptions and omitted benefits of ethanol production in a way that skewed the results, the paper said.

By discounting some of the energy inputs considered in those studies -- including the energy used to produce farm workers' lunches and to build tractors that were used in the field -- and adding in the energy of byproducts from the distilleries, the Berkeley researchers found that ethanol is an effective substitute for fossil fuels.

Pimental disagrees, naturally.  I'm inclined to side with him.  You have to take into account the energy it takes to build the tractors, unless you're talking about ethanol as a transitional fuel.

In any case, if you have to argue about it, it clearly is not going to keep us in the style to which we have become accustomed.

a related piece here at Fortune/CNN (that I was thinking about putting something together on...):

How to Beat the High Cost of Gasoline. Forever! (Stop dreaming about hydrogen. Ethanol is the answer to the energy dilemma. It's clean and green and runs in today's cars. And in a generation, it could replace gas.)

Fortune Magazine (by Adam Lashinsky and Nelson D. Schwartz)

I saw that.  Made me wish I bought a flex-fuel car.  No, I don't think ethanol is the answer.  But it might save you money short-term, especially if the government keeps subsidizing it.

OTOH, ethanol could be globalization run amok.  We could end up taking food crops from the mouths of the poor in order to put it in our tanks.

According to this analysis at Green Car Congress,

E85 fuel (85% ethanol) actually costs more to operate your car than straight gasoline. Cars get less mileage on ethanol - over 20% less for the cars analyzed - while E85 is only about 8% cheaper according to the latest figures. Plus they include a link to this chart:

which shows that ethanol prices have increased almost 50% in the last 3 months, even faster than oil has gone up, suggesting that any E85 price advantage is likely to disappear soon.

All this EROEI stuff is interesting but the bottom line is that if ethanol costs more, it's not economic to switch to it. The real question that EROEI sheds light on is this: as oil prices rise, will ethanol prices rise with them? If the EROEI is below unity, the answer is yes, and ethanol will never be price competitive. If EROEI is more favorable, then ethanol fuel will eventually be better than gasoline on a price per mile basis. That's what will tell us if this fuel really makes sense or not.

A coworker pointed this article out to me this morning and we had a discussion about it.  Everyone in the office knows I'm the peak oil adherent, and not all are convinced, but know one thinks I'm crazy either.  Here is what I said to her:

This article headline and byline is very pie-in-the-sky; you have to read the last few paragraphs to get a hint of reality.  Anyone who says ethanol from biomaterial can easily replace gasoline and diesel for transportation fuel in the US isn't using their jr high level math skills.  The biomatter requirements needed to replace current transport fuel production in the US are formidable.

Ethanol from fermented corn sugars is barely net energy positive, if at all - takes as much or more fossil fuels to fertilize plant harvest and transport the corn than you get back when you burn it.  ADM can only make a reasonable profit with massive corn subsidies.

Ethanol in Brazil works because sugar cane can be grown year round there without any fertilizer and Brazilians have far lower car ownership rates and thus lower fuel use than we do.  Eventually their fields will decline in productivity and they will have to choose between food and fuel.

The cellulosic ethanol process the article mentioned makes more sense for N. America, especially since you can use crops that are sustainable over the long term without fertilizer, but even in that case the amount of land you need to devote to fuel production is stunning.  Home grown ethanol will likely amount to perhaps a significant but likely a small fraction of US transport fuel needs.  In the long term as fossil fuel based fertilizer costs continue to go up and soil nutrients continue to deplete we will need to do some serious thinking about whether we should be using our arable land for food or fuel production.

Cellulosic ethanol is an important part of the solution to our long term transportation fuel needs but only a part - we still need to aggressively push coal to natural gas and coal to diesel technology, vehicles with greater fuel efficiency, plug-in hybrids, etc.

For my next car I wouldn't be opposed to buying a car that is E15 capable, or better yet, is a high efficiency diesel.  A plug in diesel hybrid would be fantastic, if one were to become available in the next 4 or 5 yrs.  Whatever it is, it will get a lot better gas milage than my current car.  The cheapest way to reduce dependence on foreign oil is not to use it in the first place.

Regarding ethanol, here is a link to an article dealing with the fact that the growth of plant mass for ethanol production is beginning to interfere with the production of food:

Most of that grain is feed for cattle.  It is food alright, food we currently waste feeding to cows and pigs and chickens with a 12:1 return.  How much biomass could we grow on all that land?  How much biomass could we grow on all the land we currently waste on tobacco?  And *!%$# Corn and Soy anyway.  They are food crops, not biomass crops, they are just subsadized.  We need to look at diffrent plants.

Its not a replacement anyway you do it.  But it could be done alot better.

Some comments to this thread from someone from the midwest that might reduce the rhetoric a bit.

  1.  Corn grows optimally here unlike in the south, east and west.  All places I have lived and seen irrigated corn grown which makes no economic or environmental sense. Plenty of rain in the midwest most years.  Corn is a big grass which is what the Prairies were before we killed all the buffalo (grazing animals used for food) and tilled it under.  It is also related to sugar cane.  Both are C4 photosynthetic plants which have extremely high biomass production.

  2.  Many crops won't grow well on the old prairies.  Very severe winters and hot summers.  Annual plants particulary grasses are best.  Extreme weather events are normal here and make other crops much less profitable.  Vegetables, particularly on large scale, can be risky because of frost, hail, drought, and wind damage.

  3.  Forest don't survive well on the prairie due to the climate.  Most evergreens winter kill due to midwinter thaws.  Deciduous trees often get drought stressed late summer due to heat and high winds on the open uplands.  Only stream valleys are safe.  No trees means sustained high winds almost daily.

  4.  Animal production is a way to provide highly digestable protein from mostly inedible plant fibers.  Humans can't convert the ruffage into energy the way cows can.  So grazing mixed with supplemental grain is an extremely efficient way to feed people.  

  5.  Humans evolved as omnivores and meat protein has always been a part of our diet.  Yes, we can live as vegetarians but it is very difficult and often relies on supplements, often extracted from animals.  The problem is factory farms.  Not eating meat.

  6.  Lastly people live here and own land.  They need to make enough money to retain that land.  Farm prices are ridiculous.  Corn, wheat, beans are all the same price, in actual dollars not adjusted for inflation, as they were in the mid 1970's.  Prices for everything else has gone up just like everywhere else.  

In an ideal world we could live without all the meat.  Grow sustainable food.  Use less energy.  Live close to work. And be benign to the environment.  Unfortunately the agricultural base of the U.S. is under much more pressure than even the manufacturing base.  People have been doing whatever they can to survive since the early 1980's, when the last energy crisis hit.  Most have gone out of business, lost their land we has been consolidated into larger holdings.  The government has done nothing for them of substance for 25 years.  

People here have long memories.  They are taking matters into their own hands with respect to energy independence because that is their single biggest expense year after year.  Iowa doesn't lead the nation in ethanol production, biodiesel production, and rank #2 or #3 in wind energy and have a viable solar cell manufacturing base (Iowa Thin Flim Technologies) because they are money losing approaches.  These are integrated into the communities as a way to reduce energy costs because our incomes are much lower than the coasts and energy prices take a bigger bit from that income.  

This approach is working for many coops, small communities, and electric companies.  People don't pay much attention to studies that say wind or ethanol won't fix our problems when they already have two wind turbines and an ethanol plant in their town and have gone from net importers of energy to net exporters.  That is why 15-20 new plants and 800 turbines are built each year.

There are some apparent benefits in terms of land productivity by adopting a vegetarian diet but, even if that was desired, I think that mixed agriculture including animals would be essential:
  • A balanced diet is usually difficult to achieve from locally grown crops without incorporation animal produce and / or fish
  • Growing crops without mechanisation is very labour intensive, could cost maybe 50% of available labour to provide a vegetarian diet, farming animals is an efficient way of using human labour
  • Animal labour may be useful to partly mechanise crop production
  • Animal manure will be essential to maintain agricultural land fertility in the absence of artificial fertilisers
  • Many, many by products of animals will be of important use
  • Animals can use marginal land more productively than crops
  • They act as food store for the more inclement months when crops will be limited, especially in cooler latitudes
  • They are good to talk to when most of the humans are being silly

I've not really thought about living on the Great Plains of the USA. In the context of your points, NC, it would seem that access to adequate water, woodland and shelter from wind would be high on the list of desirables.
I agree with you that for the most part humanity has always eaten meat, but it is the scale, early humans would only eat meat once every couple of weeks and the meat was wild, not all fatty from sitting around.

some societies/tribes were veggie, the essennes and the gnostics and even early christians!!

"the problem is factory farms. not eating meat"

well how do those farms exist? surely it is because people eat meat?

I think if we are to survive post peak then your ideal scenario will be the only scenario, so local edible indigenous plants should be looked at, we have to move away from this "mono" farming and become more diverse, then when one crop fails there are plenty of others.
 if you have a look at
there is a massive database of edible plants 7000!

I sympathise with your farming community being destroyed by the megacorp supermarkets, its happening all over the world

BTW did you read the bit about a cow taking 6 barrells of oil to get to market?

Well now,dad gum it, a good while ago a couple of big strong farm types from Iwoa came by and asked me if I  could make a tractor that would run on corn.   I, an eternal optimist, said, of course we could, any power you want, and even better, it didn't need corn, we could make it run directly on just old field trash, like stalks, cobs, and other such stuff that usually just rotted (to some benefit, of course).  They got all excited and asked me what it would cost.  I made a WAG that the development and factory might cost $50E6, but they could then sell the engine to all the tractor companies.   They said that was way too much and left.

Big mistake.  Just think what a business they could be doing now!  Anyhow, the possibility is still sitting there, but now it's most likely to be taken by the Chinese.   If so, good for them.  After all, the diesel I have now came from Japan.  Trouble is, its fuel came from youknowwherebadbadbad.

The Science article must have been the impetus for this NPR story today:

I only heard the tail end of the story, but one statement got my attention:

"And in fact making and using ethanol does almost nothing to lessen the amount of greenhouse gases that warm the atmosphere."

My understanding was that the production and combustion of biofuels are carbon-neutral and therefore would not contribute to greenhouse gases.  Can someone clarify this?

Interesting, isn't it?  It might be that they are representing a postive as a negative.

I think biofuels are often called "carbon neutral" because they take CO2 out of the amosphere (when they grow) and the put it back again (when you burn them).

Fossil fuels take carbon from underground and add it to the atmosphere.  One adds, and one is "neutral" (or close).

As far as of ethanol's CO2 impact, even the latest study apparently shows it to be only marginally energy-positive. That means that producing a certain amount of ethanol still requires burning quite a bit of fossil fuels. Not quite as much as if you used oil directly, but almost as much. So there is still considerable CO2 impact from using ethanol, at least as it is grown and processed today.
Worth noting from the NY Times today Lukoil Reports a Big Find in the Caspian Sea.
"This year is unique in terms of reserve growth," Leonid A. Fedoun, a vice president, said during a news conference. He noted that Lukoil had added a total of 4.5 billion barrels to its estimated oil reserves this year, including the new discovery. "Our geologists are lucky and experienced," he said.

The total probable and possible reserves of the new field, called Filanovsky, are 600 million barrels of oil and 1.2 trillion cubic feet of gas, the company said.

Not exactly what I'd call a megafield for oil but in common parlance it would be called a giant field. Amounting to approximately 7.14 days of world liquids fuel comsumption (not counting the dry natural gas but including condensates, wet gas). Onward and upward!
But Exxon is paying $50 million to get the hell out:

Exxon Mobil Corp. will pay a $50 million claim after refusing to continue drilling at two offshore fields in the Azeri sector of the Caspian Sea.

Exxon Mobil will pay $32 million to exit exploration of the Zafar-Mashal deposit and $18 million to stop work at the Nakhichevan deposit, an official at the press office of the State Oil Co. of Azerbaijan said Monday. The official declined to be identified in line with company policy.

Oops, forgot the link.  It's from the Houston Chronicle:

Maybe "giant" but barely. For example, the seven largest oil fields of the North Sea typically produced 400,000 barrels per day, which would exhaust this field in only 4 years if it was all available. Not sure what production rates they would forecast for this field, but clearly much lower that that. Overall the Caspian, touted in the late 1990's as the "next Middle East" has been a great disappointment, and the scene of Exxon's most expensive drilling failure ever in Oct 2004, leading them to bail.
My favorite excerpt from the Legget article:

<<An anonymous informer talking to Dr Colin Campbell of the Association for the Study of Peak Oil goes further. His conclusion is that Saudi Arabia would have gone over its peak of production in the last quarter of 2004. This person speaks with front-line inside knowledge. "Saudi has at various times put 19 fields into production," he says. "Of these, eight are 'stars', being highly productive fields that produce around 90 per cent of the country's production. All the others are 'dogs' that have never worked well and probably never will. Recovery rates of up to 50 per cent may be appropriate for the 'stars'. For the 'dogs', 10, 15 or 20 per cent would be more appropriate. Make this adjustment and Saudi has depleted more than 50 per cent of its realistically recoverable reserves.">>

Note that Hubbert Linearizaton indicates that Saudi Arabia is 55% depleted.  The same method indicates that Russia is 88% depleted.  Norway, 67% depleted.  Iran, 50% depleted.  

Jerome a Paris says The 4 biggest oil fields in the world are in decline at DailyKos today.  
Yep, but I think westexas' framing it as the net exporters being in decline on the P/Q train is a better way to persuade, isn't it?
No, I don't think so.  Sorry, but that's Greek to the average Joe.
ah, maybe you're right...both need a lot of context to be understood, I suppose.
Jerome does read TOD.  He references it sometimes.  I believe he used one of your graphs earlier this week.  

Maybe he'll explain Westexas' analysis sometime.

Let's assume that the world has one oil producing country, producing 20 mbpd, consuming 10 mbpd and exporting 10 mbpd.  

Let's assume that they hit 50% of Qt and do a rapid decline like the North Sea.  So, in a short period of time, their production drops by 25%, or 5 mbpd.  This results in a 50% drop in exports.  

Let's further assume that domestic consumption is growing rapidly in the producing country, so that their consumption increase to 12 mbpd over the same time period.  This results in a 70% drop in exports.  

I particularly like the "early toppers" and "late toppers" referring to when you believe peak takes place, but
what is going on with the british press?
I just found this in todays times, its insane..

Prepare yourself for the unthinkable: war against Iran may be a necessity,,19269-2011570,00.html

A war, even a limited one, will almost certainly raise oil prices to recession-inducing levels, as Iran cuts itself off from global markets. The loss of Iranian supply and the already stretched nature of production in the Arab world and elsewhere means prices of $150 per barrel are easily imaginable. Military strikes will foster more violence in the Middle East, strengthen the insurgency in Iraq and Afghanistan, fuel anti-Western sentiment among Muslims everywhere and encourage more terrorism against us at home.

All true. All fearfully powerful arguments against the use of the military option. But multiplied together, squared, and then cubed, the weight of these arguments does not come close to matching the case for us to stop, by whatever means may be necessary, Iran from becoming a nuclear power.

This article argues that it's impossible to stop Iran from becoming a nuclear power.  We can delay them, at great cost, but not stop them.  

Personally, I don't see how we can keep countries from going nuclear if peak oil is real.    

He's right. Iran is an empire that lives by looting the periphery. It would have to learn to be a country that lives by making instead of taking. If they get nukes they will use them to steal more oil because the oil they have already conquered is running out.
Worse than us, even.
Front page article on peak oil: Sacramento On Empty published yesterday by the Sacramento News and Review, a weekly somewhat progressive newspaper.  While TOD was mentioned to the reporter, a reference didn't make it into the article :<.
The Jan. 24 Wall Street Journal had a page one article about a town in Texas that will use cow manure to power an ethanol plant.  What surprised me is that the article said in passing that natural gas is usually used to make ethanol.

Is that true?  If so, isn't that freaking crazy, given what we know about natural gas??

FWIW, you can read the WSJ article here:

For some reason the Pittsburgh Post-Gazette prints a lot of WSJ articles, including some that are behind the paywall at the WSJ site.

Dude, it used to be the cheapest way to make alcohols in bulk.  Fermentation always had the problem of distillation to get pure alcohol.
On HO's latest LNG thread, Cherenkov says
Why is the focus always, "How can we continue business as usual (or some close facsimile)?"

So, we are running out of global-warming poison in our neck of the woods. Hmmm. Let's see if we can jimmy up some imports to keep the planet's destruction on schedule....

He then goes on to tell us how we're all screwed and being the monkeys we are, we deserve our fate. I'm going make some personal remarks here that don't reflect the opinions of other editors, contributors or commenters here at TOD. These remarks concern why I do what I do on The Oil Drum. Since this is an open thread, I thought this was the appropriate place to make these remarks.

  1. Planning and knowledge are better than ignorance and catastrophic surprises. As the Buddha said, "Life is suffering" but a little foresight mitigates the inevitable suffering we will get down the road.
  2. Therefore, based on #1, I try to research and present the best information I have about the impending energy crises to a wide audience.
  3. Doom & gloom may be the most realistic position but not necessarily. If Cherenkov has a low opinion of Homo Sapiens -- I should say Homo Economicus -- and thinks we're all screwed and we deserve our fate, he should talk to me when I'm in an especially bad mood. He probably doesn't know the half of it.
  4. But even considering what I just said in #3, I've determined for myself that the best positive contribution I can make in the world is to do the work I'm doing on this website.
  5. No one--I mean no one--is more aware than me of the dangers of climate change to animal and plant life on this planet. I have thoroughly researched the paleontology and mass extinctions on Earth. It is often hard to carry on knowing that catastrophic global warming always lingers in the background. Just the other day, Stuart brought up the Paleocene Eocene Thermal Maximum (PETM) that occurred about 55 mya. Believe me, I know what that is. The best hypothesis about the cause is enormous releases of Methane Hydrates causing huge quantities of methane to be released into the atmosphere given some great warming of the planet's oceans due to unknown causes. As you should know, the oceans are heating up now. The great Permian Extinction (at about 251 mya) was most likely brought on by very large increases in the CO2 levels in the atmosphere brought on by Siberian volcanism over some thousands of years--this caused an approximately 5 degrees Centigrade increase in the global mean surface temperature. This is not outside the range of some climate model scenarios.
  6. Massive changes in energy usage on this planet are absolutely necessary to make a decent quality of life viable for future generations.
But just saying "we're all screwed, fuck it" just doesn't cut it, does it? Not for me. I think humans create most of the problems they have just so they can keep themselves busy solving their self-created problems later. Al Franken has a good job on Air America because Bush lied us into war in Iraq (over oil). Don't look for him to acknowledge that anytime soon.

But given the limited choices about energy issues that are only partly in our control, I would rather try to make positive contributions toward greater knowledge of what's happening than just give up and whine about it--based on the slim hope that some future suffering is better than great future suffering that includes dieoffs and the like.

best, Dave

But just saying "we're all screwed, fuck it" just doesn't cut it, does it? ... I would rather try to make positive contributions toward greater knowledge of what's happening than just give up and whine about it ...

No argument; your stance is admirable and probably represents the mainstream of TOD. I'm guessing that the underlying syllogism from some posters is:

  • If humans continue to behave the way humans (nearly) always have, we're all screwed.
  • There is every reason to believe that humans will continue to behave this way.
  • [Your doomsday scenario here]

And while I'm resolved to fight for a better outcome, I do think the argument is a compelling one...

I do think the argument is a compelling one...

But it's also a useless argument.  It leads one to no new ideas, to no solutions, to nothing.  You can bet that, if there are solutions out there to the problems the world faces, it won't come from someone who's sitting on their hands while saying that we're all doomed.

I think it depends on your goal.  If your goal is to save the world, you are correct.

If your goal is to save yourself and your family, or to profit off the chaos, realism may be better than optimism.

Profiting from the chaos and saving your family does no good if you don't have a viable world to live in.  You have to try and save to world anyway.  The last man standing is still the last man.
Nah.  You can believe that one person can't make a difference, so the best you can do is prepare for what's inevitably coming.

Alternately, you can believe that civilization will inevitaly collapse, and that is what will save the world.  IOW, saving the world doesn't have to mean saving our high-tech lifestyle.

That with the last person standing would make for a great Twilight Zone episode. [cut in Rod Serling]

Here is Patrick Robertson, the last man to survive a nuclear holacost and multiple hurricanes as he stands in the deserts of Saudi Arabia. Welcome to... the Twilight Zone... [cue up music]

Would you REALLY want to be the LAST man standing? I bet not. Sure, you'd own the entire universe, but it'll be ridiculously lonely. And there's no healthcare as all the docs are dead. Something for the remaining rich idiots to think about, after the lerrer rich were killed off by postal/Colombine-like suicide killers. The Arabs perfected the suicide bomber, and we Yanks perfected the suicide gunman. Any severe social unrest will likely include suicide killers of either or both types. Each one will likely have a pet agenda (not necessarily revealed in a suicide note) but still cause death. We can only expect the pace all around to rev up, as civilisation revs down!

This is not good, obviously. This means that a "war on terror" can only rev up as oil production inevitably revs down as we use it up. The only hope is to try to defuse it by getting a LIBERAL into power, and who doesn't get drunk-on-power. Let Osama laugh. He's depending on the oil peak to play out to serve his pet agenda of Islamifying Earth. We must not let religion hijack reason. Religion is only a destructive force as of now. It can serve no good. All "charity" efforts are actually a try at converting people to the "charity" group's cause, which is now to destroy infidels of that cause. RELIGION IS EVIL.

If you don't think religion isn't destructive, I've got two numbers for you:

9 and 11. Enough said.

Great rejoinder, Dave.  Individually we can attempt to be part of the solution knowing full well that our efforts may be as futile as that of Sisyphus pushing a rock up a hill.  Yet, in the end Camus concludes that Sisyphus is happy.

You have already grasped that Sisyphus is the aburd hero. He is, as much through his passions as through his torture. His scorn of the gods, his hatred of death, and his passion for life won him that unspeakable penalty in which the whole being is exerted toward accomplishing nothing. This is the price that must be paid for the passions of this earth. Nothing is told us about Sisyphus in the underworld. Myths are made for the imagination to breathe life into them. As for this myth, one sees merely the whole effort of a body straining to raise the huge stone, to roll it and push it up a slope a hundred times over; one sees the face screwed up, the cheek tight against the stone, the shoulder bracing the clay-covered mass, the foot wedging it, the fresh start with arms outstretched, the wholly human security of two earth-clotted hands. At the very end of his long effort measured by skyless space and time without depth, the purpose is achieved. Then Sisyphus watches the stone rush down in a few moments toward that lower world whence he will have to push it up again toward the summit. He goes back down to the plain. It is during that return, that pause, that Sisyphus interests me. A face that toils so close to stones is already stone itself! I see that man going back down with a heavy yet measured step toward the torment of which he will never know the end. That hour like a breathing-space which returns as surely as his suffering, that is the hour of consciousness. At each of those moments when he leaves the heights and gradually sinks toward the lairs of the gods, he is superior to his fate. He is stronger than his rock.
Dave, good post. Individually, we're all dead. So what's to think about is the species. There's nothing that says the species is doomed. Everything says we are going to have to back up. How far is the question. And that in turn depends on when and to what extent science and rationality prevail.

I personally am a short-term pessimist and a long-term optimist. We learn through suffering, but we can learn.

I also think it is very difficult (ok, impossible) to know in advance how far we will have to back up. But it could be quite a bit.

Thanks for the heartfelt post, Dave!

I figure that I'm toast, so I might as well enjoy living life in a way that i imagine will be the best gift I can make of it for my little ones.

I do believe in science, but I believe in a kind of poetic justice that always operates in a suprising way.

The proud and mighty are always tripped up by making some false assumption that is so obvious --  a kind of cosmic toe-stub.

The cosmos seems to bring life out of the most extroardinary circumstances.

So I also try to learn and plan and work....and hope for good suprises even though I anticipate very difficult times!

- pedaling along.... Gary

I'm a cynical, sarcastic, pessimistic SOB by nature.  But not all the ime.  And I'm a father and a husband.  I was raised to believe we all have an obligation to contribute back to our society.  There is no option but to try to help in whatever way I can, while at the same time upholding my obligations to those I'm responsible for (sometimes those goals may conflict).  Perhaps if one feels no obligation to one's fellow man, then it's ok to roll over and wallow in defeat and dispair - it's not an option for me.

And even if our attempts to understand are ultimately weak and pathetic, I believe they must make us better prepared than otherwise.  It's all about improving the odds, and I think we're going to need whatever advantages we can get.  

So please (all) keep up your efforts, and know that they are appreciated by at least some of us.  

Dave, my thoughts exactly.  See my comments above on ethanol and farming.  Comprehend the problem and look for workable solutions.  Run some experiments on large scale to gather data.  At least start in a more sustainable direction even if it isn't the best solution imaginable.  We can't keep doing nothing while waiting for the perfect solution to come along in the future.
Suppose I either possess or sit atop a lot of oil. I understand peak oil. What should I do to make money? I know that oil is aleady climbing in fits and starts. I have every reason to believe it will be worth more and more, exponentially---without my doing anything.

From a strictly profit point of view, my best shot would be to just sit there and wait! Far from producing more, it would behoove me to run down my reserves as slowly as I could get away with.

Now of course this is completely unrealistic, because the oil companies are not nearly as smart as I am and will never figure this out. Nor are the oil possessing countries. Nor, of course, are oil companies soley interested in profits---first comes the welfare of humanity.

Even if they were that smart, they (oil cos. or countries) would realize that there are risks in being quite so brazen. A country would risk destabilization or invasion. An oil company risks very bad press and risk of wrath from other blocs of big capital, other players. So their profit maximizing scheme would need to be tuned and attentuated.

Luckily, things are not that way. Because if they were, this could turn into a very nastly feedback loop (I won't say doom loop) which could greatly accelerate and intensify the already serious underlying situation.

Isn't your decision to produce affected by whether you have already made massive fixed investment in development and infrastructure?  In that case, revenue in excess of operating costs goes to cover fixed costs.  On the other hand, undeveloped reserves are a different story.  As a part-owner of ANWR, I say leave it undeveloped -- it will be worth much, much more to our grandchildren.
"Isn't your decision to produce affected by whether you have already made massive fixed investment in development and infrastructure?"

Pure profit maximization says no---whatever it's worth now, it will be worth much more in the future. Doesn't matter what it cost you to get there.

"In that case, revenue in excess of operating costs goes to cover fixed costs.  On the other hand, undeveloped reserves are a different story.  As a part-owner of ANWR, I say leave it undeveloped -- it will be worth much, much more to our grandchildren"

You're introducing sentimental considerations here---the common and long term good---total slop from the point of view of profit maximization.

My point is that profit maximization could lead to a freeze up of the oil/gas market at some point far beyond the seriousness of the physical supply situation---i.e. precisely the opposite of the complacency and denial that prevails now. This could take place well before peak oil becomes the common opinion. I believe it explains some things happening already.

Actually this reasoning is one of the reasons I still tend to be skeptical about Peak Oil theories. Why aren't oil owners, who you'd think would have the greatest motivation to be informed about the future income prospects of the oil that provides them their livings, acting as though they believe in it? As davebygolly points out, the last thing you'd do is to  produce all-out today, if you thought your oil might be worth ten times that much in a few years.

Now, you can invoke all kinds of excuses and explanations for this, from altruism to conspiracy theories, but to me they don't ring true. People are selfish, and conspiracies fail. Plus, what would be the point of the conspiracy? You'd have to have companies conspiring to reduce their profits! It's far more likely that they would conspire the other way, reduce production and increase profits.

As far as invasion, OPEC did exactly this in the 1970s, remember; they banded together and reduced production, causing great pain in the rest of the world. They didn't get invaded. Instead, their conspiracy broke down due to selfishness and desire for profits on the part of member countries overcame the restraint necessary to make the conspiracy work. If those OPEC countries really believed they were about to run out of oil, their profit motive would have been aligned with the conspiracy and there would have been no incentive to break ranks and cheat.

I've posted several times on the optimal strategy for an oil producer to maximize profits. He estimates the course of future prices, and if they are rising faster than the rate of interest, he reduces production today so he has more to sell in the future, when oil is worth more. OTOH if he thinks future prices will climb slower than interest rates, his incentive is to produce at maximum levels today, while the price is good.

I still believe that objective observations of the behavior of oil producers suggests that the second scenario is in play. They don't act as though they anticipate rapid price rises in oil over the next several years. This observation is confirmed by the oil futures markets, which allow you to buy or sell oil today for delivery as late as 2012. Prices for that year are no higher than today (in fact they are lower), suggesting that oil buyers and sellers do not anticipate large price increases in this time frame. This further explains and confirms that oil producers don't believe in Peak Oil and want to sell at maximum volumes today, to take advantage of high prices.

If you have a strong opinion that they are wrong and have a few thousand dollars to invest, you can buy an oil futures contract and in effect own oil yourself. Then you'll be in the same position as an oil producer to profit from future price increases.

Have you noticed that oil is usually offered in leases from some governing body?  If they offer it, the only people who will bid are those with financing.  And if they have financing they have to pay it back.  Ipso facto, all oil offered is drilled and sold immediately.

I really think the only people in a position to defer are governments (and those rare individuals sitting on ancestral oil - with no death duties to pay).

Oh, and by the nature of governments, whose power rests in the dispensation and/or revoking of benefits ... they'll dispense.
An unstable government spending a lot of money to keep the populace happy couldn't reduce production, because they would be afraid of losing their jobs and their heads.  Saudi Arabia is probably in this bind.  Venezuela probably is too, come to think of it, Chavez is spending a lot of oil money on social programs.
This is a reply to both Halfin and the original post by davebygolly.

I like the lines of reasoning here, but I'd like to point out some things that might effect those oil producers who are sitting on that oil.

As a company, you want cash flow. Sitting on oil is like owning a stock. If your stock triples in value, you are still not any richer, you need to sell the stock to collect your profit.

If you are ExxonMobil, you have to pump the oil in order to feed your employees. You can't simply wait ten years and then setup shop when you feel like the price is right.

Next - in pumping the oil you want to maximize your profit, which means you have to dive in. You have to lease rigs, ships, build pipelines, and everything else in economies of scale that are going to minimize your extraction costs.

Building and leasing and all the other stuff, in turn, requires borrowing money for plant and equipment, so to meet those debt requirements you have to keep pumping. You can slow down maybe when you feel the price isn't right, but the leeway you have is probably not that great.

Also as Michael Economides has pointed out, alot of oil producing countries can't get the financing deals that Western corporations can. So they have to pump oil to get the cash to build the infrastructure to pump more.

Places like Ecuador that have nothing but oil and no money to speak of are held hostage by the World Bank and their creditors. "You want us to erase your debt - pump oil."

There probably is alot of this delayed extraction happening that we don't know about. In fact, I read somewhere that some in Kuwait have advocated slowing production so that they have something left in the future.

And just to throw in an economic reason(from a cynic, not an economicst)even if it were the IOCs' decision, they're beholden to shareholders on a quarterly report basis, not on a "what will your profits be ten years from now" basis.  Which, generalized broadly, is a big part of our problem.
good point.
During the seventies we developed and in the eighties we deployed technical innovations in seismic that reduced the cost of drilling wild cat wells be using the differences in shear and pressure wave transmission through oil and gas vs matrix rock to detect where oil and gas was likely to be. The price collapse was due to that technical innovation.
Not political decisions.
I am now the proud owner of a Xootr Swift folding bike.

I needed something that I could fold away in our new, upper-floor office, but decided an electric drive was not really necessary for a four mile commute.  I can always add a BionX or other e-drive later.

I test rode three other bikes today:

The Brompton cleverly folds into an even smaller package, one I could see carrying on a train or bus, but I thought their plastic three-speed gear shifter was too fragile.  The three-speed costs about $650, while the six-speed versions cost $1,100 or $1,300.

The Dahon looked too cheesy to even ride.

The TidalForce S-750, by WaveCrest, was comfortable and fast, but costs about $2,800 and doesn't fold.  The folding M-750X version costs $3,300, a lot of money for a twenty mile range.

The Hase Lepus, a folding recumbent trike, had none of the stability or steering problems I found with cheaper trikes, but doesn't fold all that small, and costs over $4,000.  

Congrats on the new Xootr bike!

It looks quite sweet!

I ride cargo trikes and pedicabs, but have a love for all HPVs.  The assist seems like a fine idea if needed.

I do indulge in the luxury of picking up Velovision magazine at my local bike shop.  We do not have a comparable publication in the US.

Bikes take much less energy and materials to make and to operate than a car or motorcycle, give us health benefits, and keep us less insulated from the planet we move around on.  Sure, some may say that it is less comfortable, but I ride daily and look at the stressed-out car drivers and I am always glad I'm pedaling, not sitting in one of those portable toxic waste generators!

Anyhow, congrats!

-- pedaling for peace and ecojustice -- Gary

I think Leggett is right to package PO and GW as a single problem. However I think he is wildly off the mark to think we can get by without nuclear. Voluntary conservation and high yield renewables will still leave a huge gap by the expectations of today's middle class. But I agree it's a shame we have to learn from mistakes that may not be recoverable.

By the way the last night's late movie on an Australian TV network was Mad Max 2 The Road Warrior.  Given that the move was made some 20 years ago the I thought the intro was uncannily prescient. In short it said those who don't have oil will attack those who do.  

Anybody know of any on-line flyers that you can download and print to distribute around the neighbourhood?

Nothing too pessimistic, just enough to get people thinking and looking around for themselves. I'm thinking about something that is double-sided A4 (or Letter) that folds into three sections.

I'm considering a bit of word-spreading to try and smooth my conscience. aginaID=121002

Repsol YPA, Spains biggest Oil Company will write off 1.25 billion barrels of oil equivalent from its reserves...(click on the link)

`I have no control over prices,'' al-Naimi told reporters in New Delhi today. ``They are not going to come down because there are many, many issues besides supply and demand,'' which are balanced, he said. Oil rose as much as 1.1 percent today.

just got word from Lucifer that hell is getting chilly and they're rationing brimstone.  

How do I post a graph? I have one from excel I would like to post and haven't figure out how to do that yet.
I do this so infrequently, that I always end up using a different each time. What I'm going to show you will seem a bit ridiculous, but it works. I know there is a streamlined method, I just can't remember it.

Copy the Chart. 'Paste Special' onto a Word Document as a 'Picture Metafile.'

Then save the Word Document as a Web Page. It will save an .htm file and a folder with other files. In the folder will be a .GIF image of your chart.

Post that GIF image.

So basically, if you read Isaiah's link to the Super G article above, that means you need to have your own blog containing the image or at least a URL to the image to post in the image source html.
You may have free webhosting space as part of your ISP account.

Or you can use free image hosting services, such as or

Just make sure they allow "remote linking."  Many free webhosters do not (such as Geocities, Fortunecity, etc.). They make their money off ads, and force you to view the ads by not allowing offsite links to images.

"Political woes limit OPEC's options as prices rise"
at 2615045_RTRUKOC_0_US-ENERGY-OPEC.xml

But ahead of the low-demand second quarter, OPEC will also seek to contain the swell of oil building up on world markets after nearly a year of cranking out some 30 million barrels per day (bpd).

"There is underlying caution, even on the part of Saudi Arabia, about the second quarter. I wouldn't rule out the potential for bullish language about a possible cut in March or April," said Michael Wittner of investment bank Calyon

Is this 'swell of oil' building something relating to distribution and refinery issues or is it just mumbojumbo?

I don't see an image here, just a place-holder. Same with your post below.

First let me say thanks for those who told me how to post this image.

I am a marketing type, so please excuse me if this analysis is rather crude. (no pun intended).

I was wondering about oil vs the unemployment rate. In '73, '79 and '91 we see price shocks that appear to have cause unemployment. In '99 we saw an increase in prices and it possibly caused the following unemployment. My thought is that are we about to see a sudden increase in umemployment from this last years price increase? What haven't we seen it yet?

It's too soon. Note the lag time in previous incidents, typically 24-36 months.  Give it time....
Well the first three the change in unemployment was almost immediate. In '99, I agree it did take about 24 months. So I was thinking we are right about the edge of the lag catching up to us.
I'm not sure about unemployment, but I can tell you about recession(or negative GDP growth). If you accept a correlation between recession and unemployment, then you are all set.

Since World War II, every relative price spike in oil has coincided with or been followed very shortly by a US recession - until now. The current situation is rather odd historically, since the price spike has been very high and deep. $20 to $65 in 3 and a half years - yet, so far, no recession.

But check today's economic news. 1.1% growth in the 4th quarter, when the analysts were predicting 2.8%. That is Bad, Bad, Bad. Astounding that the market is up so much this morning. This could be the beginning of the Big One.

I see inversion in the bond market, also, with short term rates better than those given for long term bonds. This has, historically, always preceeded a serious recession.
Also, the US deficit (trade deficit plus federal deficit) has more than doubled since 2000.  Staving off the inevitable, through rampant borrowing and fiat money creation.
I was almost shocked by the Q4 GDP data, too, but I don't think it really is the start of an imminent recession, not quite yet (though I would guess that will be upon us within a year). There are temporary factors. The decline in motor vehicle sales alone apparently was responsible for 2% of the shortfall in GDP. However, signs of a significant consumer spend slow down abounded in the data, I expect that to continue and those who are dismissing this GDP data as a hurricane engendered, temporary blip will be shown to be wrong. That sentiment seems to be the reason the markets are not adversely affected. p;siteid=mktw&dist= 26177104_RTRUKOC_0_US-ECONOMY-GDP.xml&src=cms

I expected oil to drop if GDP was on the low side, instead it has rallied (currently $67.25, up $1), bummer, should have gambled yesterday, will wait and see now. The Hamas win could be contributing to oil strength. It looks like the $65 - $70 range will be steady until the end of the winter or something shocks it upwards.

"GDP data misleading, or wrong: economists say" p;siteid=mktw&dist=

I wonder, does this mean economists are in the 'denial phase'? At least one or two seem to be recognising that there are conclusive signs of a consumer slowdown.

I personally do think there is some merit in what they are saying, the data does look a bit suspect, but I will be surprised if next month's revision to the Q4 data will boost it much above 2% (unless they find ways to fiddle the GDP deflator), nor do I expect Q1 2006 to bounce back more than a touch over 3%.

So, how long have you been on our planet? OK, I apologize for the sarcasm. This time was different. The unemployment binge happened before the oil inflation. The cause? We passed Peak Stock Value. The auto workers will be justified in attributing their debasement to oil, but that may be about it. Pay no attention to the OFFICIAL unemployment figures, they are just another fudged statistic.
Hot Prices from CNN Money: $262-$131 /bbl

"More realistic -- and therefore more chilling -- would be the scenario where Iran declares an oil embargo a la OPEC in 1973, which Browder thinks could cause oil to double to $131 a barrel."