The Oil Drum | May IEA Oil Market Report

117 comments on May IEA Oil Market Report

Comments can no longer be added to this story.

| Show without comments | PDF version

kevinM on May 18, 2006 - 5:47am

'Let's hope the trend really is
upward, and not a small blip.'

Why do we want oil prioduction
to rise? That simply perpetuates
the status quo and means

a) the decline will be faster when
it finally comes.

b) global warming will continue
to accelerate

Comments can no longer be added to this story.

Jack on May 18, 2006 - 6:54am

"Why do we want oil prioduction
to rise? That simply perpetuates
the status quo"

When the status quo means people not dying of starvation around the world, it's not that bad.

I am repulsed by commentors who worship every bit of bad news even though their doom porn means suffering to millions of people.

The throw away global warning citation is really a red herring - or a school given the its frequency. The contribution of oil to global warming pales compared to coal. Rapidly declining oil production would certainly lead to enough increased coal use to make it a net negative in climate terms.

My opinion is that a gradual, but steady price increase is the best way to force transition to a new paradigm.

You are free to disagree. Just recognize that when you say "I want oil production decline now", you might as well be saying "I want to see ruined economies and starving people".

Comments can no longer be added to this story.

gettingwarm on May 18, 2006 - 7:25am

IMHO Most of the people most at risk from global warming are not tied to oil production peaks. They don't participate in the oil economy, either by driving cars or by FF-based fertilizers. They live in subsistance farming or fishing villages. They suffer because we burn oil for SUV's (I drive on that gets 29 MPG) and waste it making ethanol from corn, producing lots of CO2.

Some of us hope for an early production peaks as a wake-up call to end the status quo thinking in the USA. We are addicts and the one thing we fear is loss of our supply.

Comments can no longer be added to this story.

Jack on May 18, 2006 - 7:52am

You miss the point:

Coal is a far greater contributor to global warming than oil
Reduction in oil supply is likely to increased coal demand
The net impact is more damage to the climate, not less

I am sympathetic to your desire for a wake up call, but think your train of thought is flawed. Linking oil supply reduction with reducing man's impact on the climate is politically convenient but inaccurate.

If you think that lack of oil will jolt mankind into some kind of a post-capitalist utopia, you are wrong. The end result is you are hoping for a scenario that will destroy the lives of those you to purport to care about.

Comments can no longer be added to this story.

Jack on May 18, 2006 - 8:17am

I may have missed one of yuor points as well. You said: "Most of the people most at risk from global warming are not tied to oil production peaks. They don't participate in the oil economy, either by driving cars or by FF-based fertilizers. They live in subsistance farming or fishing villages. They suffer because we burn oil for SUV's (I drive on that gets 29 MPG) and waste it making ethanol from corn, producing lots of CO2."

I'm not sure this is true. I live in a developing country where the fishermen just last week stopped taking their boats out because of high fuel costs.

China's move towards a market economy has lifted more people out of poverty than any other single act of mankind I can think of. They thrive because you consume.

Granted the environmental and climate imopacts of their growth are not sustainable, but shutting it all down will drive people back into poverty.

I do think there is a conflict between human welfare and the environment, but pretending that a drastic fall off in oil supplies is a solution is fanciful.

Comments can no longer be added to this story.

Donal on May 18, 2006 - 9:08am

KevinM was clearly not, "pretending that a drastic fall off in oil supplies is a solution ..." He was writing that a plateau in oil production would more likely avoid the ill effects of a steep decline than a continued rise.

I understand his point, but I'm not anxious for the decline to happen right away. I prefer watching production rise ever more slowly to a good long plateau, and a low decline rate after that (if we should be so lucky).

Comments can no longer be added to this story.

jokuhl on May 18, 2006 - 11:25am

Jack;
I appreciate your point about the effect that Market Economy is having on China. My impression of China is one of an essentially pragmatic more than a dogmatic culture, and that trade, entrepreneurship and innovation are more deeply embedded in Chinese history than the recent experiments in Marxism. Maybe these are just stereotypes.. (kites, clockmaking, firecrackers, Silk Trade, etc), but I am hoping that they are grown from fact, and that as China develops in a time of growing resource awareness, that this pragmatism will help them tune their development with adjustments that our own early Industrial Revolutionary Enthusiasms about bottomless wells and 'the Earth is yours to use' did not.

I don't begrudge the hunger for growth and the development of new systems for any country, I do think growth is natural and essential.. I just think that our own culture approached the Technical Age with a corresponding resentment or rebuttal, perhaps, of nature and the living world, due to some of the religious and scientific movements of the Reformation, etc, which have since allowed us to be essentially blind to the overall system that our fabulous tools grew out of, (Both economic tools as well as metal ones) and we have painted ourself into a corner. My sense is that the Chinese mentality tends to be less antagonistic to either Nature or to Science (where ours was/is-still a Love-Hate relationship to Science)

I'm not as upset by those that take some satisfaction in the 'bad news'.. They aren't 'Happy' that there will be suffering and misery, they are simply desperate that something comes along that is 'just loud enough' to wake people up to the changes that must be made. Also like the 'bad news' from Iraq, people who have known from before the war started that this would be a fiasco, would make the 'War on Terror' worse than ever, and would be spending our energies in directions that not only would backfire, but would suck precious resources from the programs that could actually help, this 'bad news' lets us know that we weren't crazy to conclude what we did, when we did. The correlation of that issue to our energy policies and habits is pretty much as parallel as is gets, it seems to me. Is there some "I told you so" in there? Of course. It will be a huge challenge to bring the opposing sides back together on either of these, so that we're able to work together to pick up and move into more sensible directions at this point, with bruised prides, without too much smugness..

It's what you get with a Jealous and Wrathful God..

Bob Fiske

Comments can no longer be added to this story.

LevinK on May 18, 2006 - 1:25pm

Relying on a event, ultimately determined by nature (Peak Oil) to solve human created problems may turn out to be a grave mistake. Oil may or may not start to decline in the next several years - the only certain thing is that nothing is certain at all... if we are going to fight Global Warming we have to do it specifically.

Comments can no longer be added to this story.

jokuhl on May 18, 2006 - 3:13pm

Thanks, LevinK..
I think that logic may be circular, but I'm now too dizzy to tell.

So what DO we rely on, Human Nature, or was that ultimately determined by nature as well? And would Peak Oil really be determined by nature if we weren't there pumping it out?

I think what we're relying on is our ability to say "Look, guys, here is where it's heading, and here's the data to back it up. Let's go over that way, instead." If you're gonna go out and cry wolf, people want to see some blood, some fang-marks, or a Wolf, or a believable Fox update about 'the ongoing Wolf scare'..

So I'm fairly certain (and for now, that will do) that there's a waterfall ahead, and I will both row backwards with my own oar, try to tell my neighboring rowers to at least consider doing the same thing, I'll have to scan around for the odd lifejacket and such, and I keep looking out ahead too, to see if there are signs with which I can convince my unconvinced fellow-paddlers that its REALLY time to reverse the thrusters or grow wings..

certain uncertainty.. that seemed a little bit of a cop-out line, but brings to mind an alternate.. "In nature, the only thing that is constant is change."

And if that's too holistic,
Someone commented of the philosopher,

"DesCartes thinks he thinks, therefore he thinks he is.."

Comments can no longer be added to this story.

LevinK on May 18, 2006 - 4:04pm

Well, I was referring to the fact that there is only so much oil in the ground, and as a consequence when/where we will peak is determined by Nature. And yes, determined by the wasteful human nature too :) But if we will fight Global Warming we must not sit and hope theat PO will do it for us. I found it more likely that tar sands and coal will be scaled up, not us changing our ways.

But - we digressed. IMO it is not useful if we are about to face an immediate crisis; at our current stage it can only result in a rush for wars and/or dirtier alternatives. A prolonged plateue and high prices may be the best we can hope for. Only in a period of peace we will be able to deal with this rationally.

Comments can no longer be added to this story.

Seadragon on May 18, 2006 - 9:02pm

Bob,

What a thoughtful post! Expressed what I have thought before but could not put into words. It's thinking like this that keeps me coming back every day.

Comments can no longer be added to this story.

avalon on May 18, 2006 - 11:16pm

I concur.. give me the stars at night, the wind in the trees, and a pile of dirt to move and I am a happy man.

Comments can no longer be added to this story.

frenk26 on November 9, 2006 - 6:09pm

I k i v o S V G

Comments can no longer be added to this story.

frenk26 on November 10, 2006 - 2:39pm

free blog only best

Comments can no longer be added to this story.

jim burke on May 18, 2006 - 11:35am

I would like to point out that our "preferences" as to outcome are in many ways inmaterial (and should perhaps be left unstated).

I say this because it seems very few people are paying attention to the debate over peak oil, and even those who do are unlikely to change their behavior until price rises force them to change.

However, we do have a huge and growing environmental problem, which can only be "solved" by behavioral changes. For instance, the fisheries of the world are overtaxed and in danger of collapse, and without a Law of the Sea, the only way for fisheries to see relief is if fishermen lose the ability to put to sea.

The Economist has lately "seen the light" with regards climate change, so they now argue both for reducing carbon emissions, but also for increasing energy production to keep the world economy growing.

In the absence of fusion energy, these two aims are contradictory.

I personally don't relish the prospect of poverty and famine amongst human populations; but nature has a way of making things work out in the end.

Nature is unfeeling, inexorable. And fascinating to watch.

Comments can no longer be added to this story.

rainsofkilimanjaro on May 18, 2006 - 8:40pm

Don't rule fusion energy out just yet. Although the hugely overexpensive ITER program cannot hope to succeed, in the coming months many new and old energy sources are likely to be tested, largely out of desperation. In particular, although reports of cold fusion have been violently decried, there is real evidence that the cold fusion phenomena is real. Check out cold fusion at wikipedia. There's a wealth of information on the subject, and it's worthy of consideration. Remember, it is unlikely that anything will pull us out of this crisis, but since we are in for difficult times, we should not ignore anything that might help us. Cold fusion deserves a second chance.

Comments can no longer be added to this story.

Ablokeimet on May 18, 2006 - 8:44am

There is very good reason for wanting Peak Oil to be as soon as possible. It is that the longer humanity keeps going down the current unsustainable path, the more painful the process of changing to a sustainable one will be. If Peak Oil now means that a certain number of people will starve, we can be absolutely certain that Peak Oil later will cause vastly more starvation. As I explain below, however, starvation is not necessarily certain.

On the other hand, this doesn't mean I want a collapse in oil production. The best scenario is an immediate peak, followed by a long, slow decline. This will produce the requisite "wake-up call" in the form of higher & rising prices, but allow the most time possible for a transition to a sustainable energy future.

Will we get that gradual decline? I'm not as confident about that as I was a few months ago. The signs are ominous that depletion rates in some of the world's greatest oil fields are considerably more than forecast by ASPO - something that does not bode well for the future at all.

Finally, it would be good for contributors in the US to remember that the rest of the world exists in a much less oil-intensive environment. This has certain important consequences. One of them is in the realm of food production & can be seen from the example of Mexico.

Before NAFTA, Mexico produced almost all of its own maize (the staple grain there). With the dropping of trade barriers in line with NAFTA requirements, cheap US maize started flooding into the country and putting Mexican farmers out of business. Now, from what I read, over half of Mexico's maize is imported.

This, however, is a pre-Peak Oil situation. If, as many predict, US agricultural production falls substantially because of extremely high oil prices making current US agriculture unviable, there will be plenty of scope for Mexico to lift its maize production again - they weren't using much oil in agriculture before NAFTA and they wouldn't have a major readjustment to make after Peak Oil. The same scenario, with different crops, will play out in many Third World countries where cheap agricultural imports from industrialised countries have put local farmers out of business.

Yes, Peak Oil will lead to much suffering as the world adjusts, but the suffering is likely to be because of socio-economic structures rather than purely technical ones. And the people who will be doing the suffering might not be just the usual suspects.

Comments can no longer be added to this story.

AngryChimp on May 18, 2006 - 9:13am

"You are free to disagree. Just recognize that when you say "I want oil production decline now", you might as well be saying "I want to see ruined economies and starving people".

Sounds like fun. Sign me up!!

==AC

Comments can no longer be added to this story.

dinopello on May 18, 2006 - 9:58am

"My opinion is that a gradual, but steady price increase is the best way to force transition to a new paradigm."

I see both your points. I'm slightly on the 'only a crisis will wake us up' side though. There is the frog in the pot coming slowly to a boil issue. I'm not sure a gradual price increase will 'force' anything. I worry that if prices gradually just increase at some point societies (like mine) will find themselves not too long from now going to work, in order to earn money for gas so they can go to work. Then, it may be too late to transition to a new paradigm. The main 'need' is to make people realize that we need to get crackin' on that new paradigm -NOW.

Comments can no longer be added to this story.

Johnny Peak Oil on May 18, 2006 - 11:11am

millions now - but billions later...

anything to slow the creation of greenhouse gasses is a very good thing...so i am rooting for the peak to hit us like a ton of bricks
if we have a slow rise in the price of energy, and therefor humans continue consuming and consuming - we will pass the tipping point for runaway glogal warming
...and then a much much larger number of people will die

take the long view Jack

yes - ruined economies and starving people, that what i want to see....

its either life on earth - or endless economic growth
there is nothing in between

Comments can no longer be added to this story.

BrianT on May 18, 2006 - 11:44am

There appears to be a consensus on this site that oil consumption and economic growth are the same thing, or so closely co-related as to be the same thing. Personally, I don't agree. Having said that, most persons on this site attempt to use far less oil than the average American. Under the oil consumption is economic growth argument the conservers of oil are dragging down the economy. If I have missed part of this one, please explain.

Comments can no longer be added to this story.

ET on May 18, 2006 - 12:30pm

I would phrase it as "Economic growth is dependent entirely on increased energy consumption." Peak Oil represents peak energy consumption and, possibly, the end of overall economic growth.

"Under the oil consumption is economic growth argument the conservers of oil are dragging down the economy."

Funny you should mention that. My wife's financial advisor said, when reviewing our abstemious lifestyle, "The economy would collapse if everyone lived like you do."

Comments can no longer be added to this story.

tate423 on May 18, 2006 - 12:31pm

As a student of Finance and Econ I would have to disagree that oil consumption equates growth. I think that we all understand is that the current consumption pattern will not maintain. One of the first questions I asked an Econ professor was when does the growing stop? There has been no economic professor to explain the end part until this semester. He actually stated that him and another colleage wished that oil would hurry up and hit $100 a barrel so that we would start to conserve.

He agreed that financially there is an end to oil, btu economically speaking there will be no end due to the cost prohibitve nature of extracting the last bits all around the world.

So I don't think people assume oil=growth, but energy=growth. Whether it be people energy or any other type, you need energy to grow.

Comments can no longer be added to this story.

fallout on May 18, 2006 - 1:44pm

If you define economic activity as the creation or providing of goods and/or services, then....
Since it requires energy to provide goods and services (be it electricity to run the computer you are using to read this, the mining of copper, the harvesting of corn, or the running of a factory in China), one could reasonably argue that the consumption of energy IS economic growth.
Less consumpiton is therefore less growth. In stagnant economic times, energy consumption is severly curtailed. Cause and effect, or effect and cause, they are fundamentally linked.

Comments can no longer be added to this story.

tate423 on May 18, 2006 - 2:20pm

I keep trying to estimate the total financial impact of failure to respond and I stop at the loss of the DOW. I mean think about it. We will shave TRILLIONS of dollars of perceived value out of our economy based on market cap. There are going to be massive losers all across the board.

Is there any indication that our entire economy could be measured like a bell curve?

What if our economic value peaked and never returns to peak value? I know the bell curve is most important to industrial applications, but what's to stop things from melting down to a dribble of what it once was as we live in a protracted state of remembering the "good ol days."

Comments can no longer be added to this story.

mikey on May 19, 2006 - 3:16pm

Economic growth, or growth in GDP, is supposedly a good thing.

But if there's a 20-car pileup out on the interstate, it increases GDP due to the sudden increase in demand for services from auto shops, hospitals, funeral homes, and insurance companies!

Ditto if you get a brain tumor and spend the next 6 months in the hospital purchasing expensive services. An avid consumer! GDP boosted!

Same if you and your neighbor each stay home and take care of your kids, but then you decide to pay each other to care for each other's kids. GDP goes up! Because caring for kids doesn't count toward GDP unless you pay for it with cash (or credit).

If you travel 5 miles by SUV, that adds to GDP. If you travel the same 5 miles by bike, it doesn't.

So yeah, adjusting to less oil will probably reduce GDP. The question is, who fricken cares???

Comments can no longer be added to this story.

tate423 on May 19, 2006 - 3:23pm

Wall Street.

Comments can no longer be added to this story.

TrueKaiser on May 18, 2006 - 11:51am

over 800 million people are starving now because of the status quo, on the other hand the staving of several billion will only be temporary and mostly in the first world..

Comments can no longer be added to this story.

Johnny Peak Oil on May 18, 2006 - 12:15pm

another phrase for status quo could be 'the current economic system' or...capitalism maybe?

any slow and gradual move away from a fossil fuel economy will only support the current economic model - therfor keeping the 800 million people in 'developing' countries starving...

we need to pull the band-aid off when it comes to fossil fuels - a little crash (or a big one) will only help civilization in the long run

Comments can no longer be added to this story.

David JM on May 18, 2006 - 1:05pm

However, one of Jack's points is that a rapid decline in oil would likely stimulate a massive scramble to coal burning and that this would be even more damaging in terms of global warming. So, not only economic collapse and starvation, a grisly sight that few in the devleoped world are really ready to see, but even more adverse environmental behavior--desperate people tend not to give a damn about the environment.

Comments can no longer be added to this story.

Leanan on May 18, 2006 - 1:11pm

My feeling is that the faster the crash, the less coal we'll burn. It will take awhile to build the new infrastructure burning more coal would require. A slow squeeze will allow us to do that. A fast crash will not.

Comments can no longer be added to this story.

Dot on May 18, 2006 - 1:26pm

I very much agree with this point.

The slower the crash, the more likely it is to be 'catabolistic', whereby it is meant that we may consume much 'natural capital'.

Imagine the planet in 100 years after a slow transition or fast crash. It is pretty clear which scenario presents the higher risk in terms of global warming.

Comments can no longer be added to this story.

Donal on May 18, 2006 - 1:40pm

In a fast crash, I could see an awful lot of people switch to heating their homes with coal. That wouldn't require much infrastructure at all, but could burn a lot of coal.

Comments can no longer be added to this story.

Leanan on May 18, 2006 - 1:53pm

In a fast crash, I could see an awful lot of people switch to heating their homes with coal.

I don't.

That wouldn't require much infrastructure at all, but could burn a lot of coal.

And how would they get the coal? Hike to Tennessee and dig it out themselves with pickaxes and shovels?

Comments can no longer be added to this story.

Don in Colorado on May 18, 2006 - 4:13pm

It's weird but our little town of a 1,000 people has a coal mine right nearby. In fact it was used by the locals for many years to get coal for their stoves. It still gets used by a few people, but most here now have central furnaces fired by natural gas.

But, in fact, they could easily go back to coal. And this is high btu coal we're talking about.

Of course we're probably one of the few communities that has nearby access to its own coal mine.

And I hate to think of the inversion problem if everybody digs out their old coal stoves ...

Comments can no longer be added to this story.

jim burke on May 18, 2006 - 10:32pm

There has been little talk of wood for fuel, but even here in Arizona there are very large forests which could be chopped down for energy.

If people are cold in the winter, or can figure out how to turn wood into bio fuels, they will cut it all down.

Comments can no longer be added to this story.

Twilight on May 18, 2006 - 10:46pm

Most of those coal stoves are long gone. Really, switching back to direct coal burning would require a lot of people to buy a lot of new cast iron and steel. Not high tech, but it still represents a lot of energy to make & ship, and money to buy (they would command quite a price if everyone were doing it!)

Comments can no longer be added to this story.

Donal on May 20, 2006 - 3:36pm

There's plenty of coal here in PA and in nearby WV, too. If they waive environmental regs, it won't be that hard to mine it. A lot of people have coal stoves (I got mine at a yard sale) and furnaces, and some of the popular wood & pellet stoves will handle coal as well.

Comments can no longer be added to this story.

MikeCotton on May 19, 2006 - 12:27am

The one thing that all coal mines have is a rail spur. Getting the coal from the mine head to market -- whereever that may be -- won't be very energy intensive, and given the demand, should be quite profitable.

Comments can no longer be added to this story.

ThatsItImout on May 19, 2006 - 4:32am

Leanan, In response to the prior poster's comment, "In a fast crash, I could see an awful lot of people switch to heating their homes with coal."

You replied, I sense with great cynicism, "I don't" and then proceeded to deliver your killer shot
"And how would they get the coal? Hike to Tennessee and dig it out themselves with pickaxes and shovels?"

I fear you greatly underestimate how easily the switch is made. In the recent Katrina period of $15 MM/btu natural gas prices, I saw the switch made many times....

In Kentucky, Indiana, Ohio, Tennessee, Alabama...most homes are heated with natural gas, but get electric power from coal for the most part...so you back the natural gas heat down, run over to Wal-Mart (Wally World, as us rednecks affectionately call it) and get a couple of electric space heaters....presto! Switch from natural gas to coal for heating! An electric blanket tops off the deal, and your cozy and warm, you heating bills are low (electric rates in the Ohio valley, TVA Tennessee Valley and most of the coal fired south are among the lowest in the nation) and you worry not a wit about global warming as long as your warm right now, and your saving money....

Another friend of mine who heats with propane bought a full load in the summer and then ran the electric heaters in the winter to conserve it, just in case, as he said....in case of what? Extreme high winter prices, or, as the TOD'ers affectionately call it, TSHTF big time....global warming is the world's problem in these folks mind, right now, they are just looking out for numba' one....I think analysis by the energy pros always GREATLY underestimates the consumers ability to put another acronym into play....YAHOO, You Always Have Other Options.....remember the 1970's, when people built basement houses with a woodstove, and took themselves right off the oil and gas markets for heat? Energy supply/demand is MUCH more complicated to model than most folks even imagine...
(It goes for industrial usage too, by the way....have you ever wondered why so many Japanese factories seem to "coincidentally" be located near the great American coal belt, and the cheap electricity it provides? hmmm....)

Roger Conner known to you as ThatsItImout

Comments can no longer be added to this story.

Leanan on May 19, 2006 - 8:49am

The thing is...we are already using coal. We never stopped. One of the reasons energy prices are high is that our current infrastructure cannot meet the demand for coal. We're using more, there was landslide that covered the tracks out west (due to poor environmental management), and the drought out west has water levels so low barge traffic is affected.

That is why I say we cannot quickly ramp up our coal use. People living close to coal mines may be able to...but for most of us, it won't be as easy as it was in the past. The population is roughly triple what it was during the 1930s, and the remaining coal is much harder to get to. That's why we machines like this, instead of a bunch of guys with pickaxes and shovels.

Mining will be severely affected by peak oil. (Just look at the trouble they're having keeping the mining industry going in Africa, with the current energy crisis.)

Comments can no longer be added to this story.

DuncanK on May 18, 2006 - 6:02pm

Jack! Welcome back! Where the hell have you been? ;-)

We have needed your calm, level-headedness over the last few months.

Looking forward to reading more intelligent comments from you again.

BTW, you missed several questions about the IOB!

Comments can no longer be added to this story.

davebygolly on May 19, 2006 - 12:27am

This kind of reminds me of my wife who gets mad at me when I wish for rain or cooler weather or whatever -- like my wishing has any effect on things.

But I really don't think it's a matter of being happy or unhappy one way or another. We all know peak is near or here. We also know that essentially nothing meaningful is being done to prepare for it (excluding war preparations.)

Knowing that a catastrophe is looming, it's natural to want to see some reaction to it, some preparation for it. So there's a tendency, somewhat illogical I admit, to want to the evidence of looming catastrophe come forward sooner than later so that this will take place. I don't think anyone wants to see the suffering that looms, much less share in it.

I'm 65. So I made it to peak. Do I consider myself lucky or unlucky that I'll (probably) see the beginning of the end of the oil age?

Comments can no longer be added to this story.