393 comments on DrumBeat: September 13, 2006
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393 comments on DrumBeat: September 13, 2006
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The LOGIC then has to be - When refineries runs at 100% - we should PAY ALOT OF $ for crude and keep the full tankers standby.... for some days...just in case
My logic gos opposite
High oil prices are still being propped up by a shortage of refinery capacity and there is little sign of the bottleneck easing until 2010, industry executives and officials discussing OPEC's future have warned.
As Jay Hanson has pointed out ad nauseum, the game stops when an energy source becomes an energy sink, when it takes more than one barrel of oil (or some energy equivalent) to produce one barrel. Something the oil sands are toying with, to say the least, in their natural gas use.
The energy sink concept will probably remain hidden as long as dollars are used, instead of BTU's, or even calories, to calculate the cost of a barrel of oil; it allows us to slip from source to sink without noticing it. Oil prices will rise so much that more and more oil looks economically recoverable. Again, not the point: what counts ultimately is whether it's "energetically" recoverable.
Once it's clear that overall resources are shrinking, this should become much more obvious (one may hope). It then gets pretty crazy pretty fast to lose lots of energy in the process of turning natural gas into petrol (the same applies to virtually all conversions).
Until then, and who knows how long after, the unlimited potential of both the rise in prices (dollars), and the ability to add more money to the system, will continue to conceal the obvious,
¿What if it does not make sense? I mean, the SUV does not make sense anyway. It is their money, and if they want to burn it that way, it is their God Given Right (tm). You will have to pry it from the cold fingers of their dead bodies.
Although it is usually someone else who ends up dead.
Good point. The earth's atmosphere is 78% N, but try fertilizing your tomatoes with it.
And then there is the slightly more random trick of loading the atmosphere with greenhouse gases to stimulate more violent weather, bringing on lightning and rain storms. My garden got a great fix of nitrogen this way last week. Hmmm...maybe I should send a letter of thanks to the coal lobby. On the other hand there was that damage to my roof...I wonder if I can sue for damages? It's all so confusing.
Sure, I know that. But it happens on The Great Spirit's terms. You don't pour it out of a bottle.
So, the economic system would ensure either an inflationary Big Rip or a Recessionary Big Crunch - either way Malthus wins.
(maybe not zillions but I'm too lazy to do the math right now)
The "unofficial" numbers are based on a Reuters report of comments by a Saudi minister that they are producing "about 9 mbpd."
http://static.flickr.com/97/240076673_494160e1a0_o.png
Assumptions: 5% annual decline rate in production; 2.5% annual increase rate in consumption.
For comparison, the North Sea is showing about a 6.5% annual decline rate since 1999, and the Arab oil producing countries had about a 5% increase in consumption from 2004 to 2005.
On the graph, note that a 20% drop in production, and about an 8% increase in consumption over a 4.5 year time period results in a 50% drop in net oil exports.
Big Oil Tells Consumers Use Less Fuel
Reuters story from Vienna
Big oil companies are telling consumers to conserve. The Total CEO states that oil will peak in 2020.
In other words, through the first half of the year, estimated net oil exports (by the top 10) are falling three to four times faster than world oil production is falling.
I think that the EB is going to add a "Net Energy Exports" category.
Saudi Arabia and many other producers have economies dominated by oil exports. If they use the oil, they eliminate their ability to import anything and eventually shut down the global economy.
Sooner or later these countries will begin to see growing domestic demand - which is boosted by export generated income and subsidized prices - as a threat to their existence and will curtail it.
This reminds me of the old Soviet Union posters proclaiming their plans to equal the west. Sounds easy on paper, but reality is a different story.
First, if they stop exporting oil, what will happen to the rest of the world? Who will they sell all of their products to? Or do you think Saudi Arabia will be self-sufficient?
Second, most of these countries have masses of young uneducated people living on subsidies and foreigners doing much of of the work. How can they possibly compete with the low labor costs in China or the established legal frameworks of the west? Petrochemicals, OK. The rest of unlikely.
All that this can lead to is either destruction of the glaobal economy or massive incentives to develop alternative sources of energy. It's a pipedream.
I think much of this analysis is based on a faulty concept that resources alone underpin economic growth. In a modern world it is far more important to create an environmnet that encourages investment and risk taking.
China imports massive amounts of resources but has has a booming ecomomy. Oil exporters may have grown with oil prices, but haven't done anything to show that they can transition to being more than giant pumps. I don't see that changing.
Export land is doomer's dream material. But in reality it can only go so far.
It won't happen overnight. The ME and Russia will gradually use more and more of their oil production for their domestic needs. In the UAE, it will be banking, insurance, tourism, manufacturing, aerospace. Russia is planning a major modernization of their military, which will allow them to take advantage of greater economies of scale to sell their hardware all over the world at more competitive prices. SA is concentrating on petrochemicals and planning on following the UAE model by getting into a wide variety of other industries. Just because the U.S. is in for some hard times economically doesn't mean the whole world is.
"Second, most of these countries have masses of young uneducated people living on subsidies and foreigners doing much of of the work. How can they possibly compete with the low labor costs in China or the established legal frameworks of the west? Petrochemicals, OK. The rest of unlikely."
"Foreigners doing most of the work?" That's what they said about the U.S. in the 20th century. In my opinion, having high levels of immigration is probably the most reliable indicator of future economic growth.
"Established legal frameworks?" They have them there too. And countries like the UAE and now SA are doing a great job of establishing large-scale duty free zones. These duty free zones basically act as a subsidy for businesses and industries of all kinds to move their operations to the ME. They've proven wildly successful.
"The rest unlikely?" It's already worked in the UAE. Now other countries in the ME are making plans to follow the same model. Russia, of course, has its massive military-industrial complex to channel its oil-bonanza money through, and within a half-century or so, will no doubt rival the U.S. on all fronts.
"...a faulty concept that resources alone underpin economic growth?" They might not underpin it completely, but it sure doesn't hurt, especially if you know how to leverage it.
"...an environmnet that encourages investment and risk taking." No country in the world has done this better than the UAE. It's being taken as a model in the ME.
"...haven't done anything to show that they can transition to being more than giant pumps. I don't see that changing." It's already changed. Welcome to the 21st century.
Dubai and the UAE have undergone a massive transformation, as you note. But - correct me if I am wrong - I believe that was spurred by a lack of oil.
I haven't seen any convincing data that shows any of the major oil producers have been able to significantly develop non-petroleum-based industries. Despite your optimism about a Rusian military based revival, it seems they are moving towards being a traditional petrostate rather than forward into a modern economy. And what aboutr other sectors?
I am a huge believer in immigation. I think in countries, like the US, where immigrants could become full citizens and access all of the benefits of their labor, it has been almostr uniformly a positive transformative force. However in other places where they remained "they", the success has been less clear. France has had big troubles with lack of integration. In the Middle East, immigrants are largely contract labor. Anyone who said foreigners were doing most of the work in the US was wrong.
Dubai is certainly moving towards establishing the legal framework needed to compete in the modern economy, but relatively it is tiny. In Saudi Arabia, women can't drive, Iran is executing gays, Russia is hardly a model of transparency.
Massive revenues from high oil prices have inevitably raised living standards and boosted consumption at home. But using oil wealth to drive more and transforming economies are different things. I think we are seeing the former and that it is a blip rather than a trend.
Nothing startling to say other than the market is controlled by supply and demand - wow. With high prices, consumers everywhere are incentivised to use less fuel and producers are incentivised to produce more. So I think we are seeing demand destruction - mainly in the poorer countries. Also a lot of new supply came on in June and July that will provide some temporary relief on the supply side.
RE: The UAE as a model for the new global economy. Use oil to desalinate water to water golf courses - that's a neat idea should be popular all over the developing world.
British Airways are top of my don't under any circumsatnces buy list - but then rumours arise that Emirates may bid for BA. Now that's a neat business startegy - to own the only airline that has a reliable supply of jet fuel.
Seems like whenever you bring up the subject of ME economic developement on here, all you get is either racist, 1970's stereotypical, or completely clueless responses.
Meanwhile, Smekhovo makes a very concise, but incredibly insightful remark and all he gets is abuse.
Nothing that I have said is remotely stereotypical or racist. If something is clueless, point it out. How about a fact? Some data? Evidence?
But if you think Smekhovo's remark was "incredibly insightful", it would seem this would be expecting too much of you.
Jack, your comments weren't at all racist or clueless. The comment made by Cry Wolf that the economy of the UAE somehow consists of, "using oil to desalinize water to water golf courses" is entirely clueless. I think you know that the UAE has one of the most diversified and open economies in the world, becoming more so with each passing day. You make a very good point that a lot of this has to do with the fact that Dubai had very little oil and that forced them to get involved in other industries.
The other thing you get a lot of here, and I guess this is probably a phenomenon across America in general, is people pretending to be anti-Bush, anti-war, etc., but then they begin to drool at the thought of the U.S. wiping Iran off the map, although they take great pains to pretend like they're against it, while they continue to count the days until it happens.
It is a fact that the ME is growing faster than almost any other region on Earth. A lot of this has to do with the high oil prices of the last four or five years. Personally, I think high oil prices are here to stay. Middle Eastern countries, led by the UAE, have also been making remarkably successful efforts to diversify their economies, using their oil money to get involved in other industries. This is another trend that I anticipate will continue. Most TODers seem to be hoping that the US will derail this trend through genocide. Personally, I don't think that is going to happen. The world put together a containment strategy when the US began planning to take over Iraq. The idea was to make sure that the US footed the entire bill, draining the country of money, while at the same time working to make sure that Iraq succeeded in establishing an independent governement. That strategy has worked. The world is now working to make sure that the US doesn't invade Iran and that meaningful sanctions won't be imposed. That strategy is working as well. Because of the very coherent US strategy the world has put together, I think we will see the US enter a period of paralysis foreign policy wise. The Iraq war will probably be the last war the US will wage as an empire.
Rather than trade insults, let's trade predictions. About a month and a half ago, oil was at 76 and I told people it would fall to 57. Most people said I was crazy. At about the same point, everyone was getting all hyped-up, drooling about the prospect of a war against Iran (while claiming to be against it, of course). I told them it wasn't going to happen. The world has succeeded in reining in the US, I said. Well, they have. I hope everyone here will be around 15 to 20 years from now to witness the economic powerhouse the ME will become.
That's more an anti-government thing, not an anti-Saudi thing. IOW, they aren't talking about the Saudi people, but about the various ministers, etc., who keep saying there's plenty of oil. The same thing is said about Bush, Cheney, the CEO of Exxon, etc.
I hope you're right. You don't exactly get the impression that a lot of people are hoping that they're not lying though, do you?
I hope they're not lying.
Hey, since you're here, would you mind telling me how to make those shaded boxes when you quote something from someone else's post?
Also, you do great work here, very balanced selection of articles, very cool-headed responses/analysis/interventions. Maybe i'm just stressed out today.
Make sure you are commenting in Auto Format or HTML. (I am posting in plain text, just for this post, so you can actually see the HTML coding.)
I'm in business!
I see golf courses all over the world being sprinkled and groomed - often in areas where water is in short supply, take the Algarve coast of Portugal as a good example. So I do believe that gof is popular in the UAE
http://www.jumeirahgolfestates.com/
http://www.arabianranchesgolfdubai.com/
- and the courses will be watered by either aquifer or desalinated sea water - and I don't think this is a sustainable activity. Much better to come to Scotland - the home of golf - where it rains every day.
The UAE ceratinly has done a great job diversifying into tourism - and this will have driven construction and services. I guess its liberal attitudes (allows alchol to be consumed) also means that it is being built up to a regional oil service sector. My next door neighbour and his family have lived there for the last 3 years - Bill drilling horizonatal wells in Iran whilst living in Dubai- Iran by the way is not Arab.
An interesting study would be to look at tourism in the ME in realtion to countries that permit alcohol to be sold and consumed.
The last time I was out there, Bahrain was the only other country in the region with liberal laws on alcohol. I was going to move on to The King Fahd causeway linking Bahrain to KSA... but I think enough said.
You can get a drink at the Shell base in Oman too.
Jack made some interesting points as well, although we obviously have a fundamental disagreement on where the region is headed. Only time will tell.
And of course, Smekhovo's comment:
is one for the ages. Things are changing pretty fast over there. I think it's awesome.
I think you were misled in this instance by the use of the term "Saudis" as shorthand for "Spokespersons for the Saudi Arabian oil industry", which is how the term is usually used around here.
In general I see very little racism on TOD, but maybe I just have a thicker skin. Or perhaps I'm merely an insensitive schmuck. It's hard to tell sometimes.
I guess the only thing we can all be sure about at this point is that the Saudis have never lied about their oil production capabilities yet. Makes me wonder if people should be so sure that they're lying now.
If they go into serious decline it won't be concealable, but I doubt if they will admit to geological limits unless the situation becomes ridiculously obvious.
The mathematical (HL) method and our historical analogues have both been indicating that Saudi Arabia and the world are on the verge of irreversible production declines.
As Deffeyes and Simmons respectively both warned (reinforced by work that Khebab and I did), world and Saudi crude + condensate (EIA) production are down since December, 2005.
Since I studied the available data on Ghawar, and since I read the WSJ article on Cantarell, I have been relentlessly warning that both of these fields were likely to decline/collapse. Last year, these two fields accounted for about 10% of world crude + condensate production. Both fields have rapidly thinning oil columns, between advancing water legs and advancing gas caps. It is much easier for water and gas to flow through a reservoir than it is for oil. The higher the production rate, the more likely it is that gas and water will bypass the remaining oil.
Richard Heinberg reported that Ghawar is crashing. IMO, this is supported by the decline in Saudi oil production, by the shortage of natural gas (probably as a result of the loss of associated gas) and by the Saudi's new status as a fuel oil importer. Furthermore, Ghawar is now at about the same stage of depletion at which an analogue field--Yibal, same reservoir, same horizontal wells--started crashing.
Sprott Asset Management reports that Cantarell may be declining at up to 50,000 bpd per month (600,000 bpd per year). This is consistent with the worst case decline rate of up to 40% per year. Note that the remaining oil column of about 825' is thinning at the rate of about 300' per year.
We know that the next two largest producing fields, Burgan and Daqing are also declining.
With all four of the largest producing fields in the world almost certainly declining or crashing, I don't see any reasonable scenario that would result in higher world oil production. Furthermore, I continue to predict that net oil exports will continue to fall much faster than world oil production is falling.
One final point. I have frequently used the example of the East Texas Field (producing with a 99% water cut)--as an example of where these giant water drive fields are headed.
As far as an impact on world production is concerned, the temporary shutdown of the Prudhoe Bay Field was almost a non-issue. The corrosion of the surface facilities was a symptom--not the problem. The problem is that the damn field has a 75% water cut. Prudhoe Bay, like so many of the other giant fields in the world, is in a terminal decline.
Ghawar and Cantarell are two warning beacons, burning brightly in the night sky--ignore the warning beacons at your peril.
You stated above that Both fields have rapidly thinning oil columns, between advancing water legs and advancing gas caps. It is much easier for water and gas to flow through a reservoir than it is for oil. The higher the production rate, the more likely it is that gas and water will bypass the remaining oil.
I'm trying to understand how this happens. Why is it more likely for gas and water to bypass the remaining oil at a higher production rate?
I'm picturing an oil reservoir that's 2/3 full of oil. The oil sits at the bottom 2/3 and there is gas in the upper 1/3. If I pump water into the reservoir the water will go to the bottom, the oil will rise to the middle, and the gas will be put under pressure at the top.
Is that how it works? Getting a clear picture of this will help me understand better how reservoir depletion works. If there is a reference somewhere that will help me understand it, please let me know.
Thanks,
Tom Anderson-Brown
It's a question of relative permeability. Permeability relative to gas is always higher than to fluids. In virtually all reservoirs, permeabilty relative to water is higher than to oil. As is true for any complex system, there are a huge number of variables. One of the variables is the API gravity of the oil. The lower the gravity of the oil (i.e., the heavier it is), the more likely it is for water and gas to bypass the oil.
In both fields (Ghawar & Cantarell), from this point forward the operators can choose to have a higher remaining recovery or they can choose to have a higher short term production rate, but they can't have both.
Pemex reports that they only have two problems at Cantarell--oil wells watering out and oil wells turning into gas wells.
"Richard Heinberg reported that Ghawar is crashing. IMO, this is supported by the decline in Saudi oil production, by the shortage of natural gas (probably as a result of the loss of associated gas)"
One thing I dont' understand: as Ghawar crashes (and pressure declines, per "Twilight in the Desert"), shouldn't the associated gas come out of solution and form a gas cap? And shouldnt' that gas then be exploitable?
Or do you think the Saudis are reinjecting water and gas and the kitchen sink to keep up production, and hence have no gas to spare for joint chemical factories?
The field has already formed a secondary gas cap. It's very bad idea to produce the gas from a gas cap to an oil field, at least while the oil is being produced, because the gas withdrawal has a highly detrimental effect on reservoir pressure.
I suspect that the Saudi's natural gas production is down due to the loss of associated gas production that was being produced with the oil in the field.
Pour motor oil over sandstone. It only goes in the surface at first.
Water & gas go through sandstone MUCH faster than motor oil.
If one produces and oil well too quickly, "coning" can happen. The "profile" around the well has a "cone" of water around in one direction (down) and a cone of gas in the other (up). Away from the well, a slug of oil remains, but all the oil around the well bore is produced.
Simplistic, but I hope that it gets the idea accross.
Tom Anderson-Brown
What really keeps oil from moving is high capillary pressures. Generally the seals consists of shale and in some cases evaporites. The bigger the oil column, the better the seal has to be.
In some cases, a reduction in porosity and permeability in a reservoir rock is sufficient to keep oil from migrating, but it will allow water to move. For example, we have seen cases where one has oil shows in a structurally higher sandstone, and we test saltwater, and then we test oil from the same reservoir downdip in a structurally lower position, in a more porous and permeable portion of the reservoir. The water test was in a trap facies that kept oil from moving updip.
I do have a question for you though. Given the post you made above, and your knowledge of what is happening in the oil industry, what do you think the timeline is for significant impacts to the U.S. and the world to start occuring? I don't mean just a return to $3/gallon gas or even $4 or $5. What I am curious about is serious impacts, such as the economy tanking. Things that will make more people sit up and take notice that something is going on. (Even if they don't recognize or even belive in PO.)
Thanks.
The question is, when will the decline rate of mature fields overcome the increase from new supplies? New supplies are relatively easy to predict, but the decline rate is very hard. SA, for example, is rapidly expanding its number of rigs, they say to expand production but tod thinks in a desperate attempt to maintain production.
Still pretty murky. Most think we will only know the peak a few years later. But, pesonal planning is easy - get out of debt, reduce your energy consumption, etc.
"The question is, when will the decline rate of mature fields overcome the increase from new supplies? "
There is a third thing. And I think Westexas is about the only one blowing the horn on it.
HOW MUCH WILL BE FOR SALE?
It don't make no never mind if SA can pump 15million a day if they internally use 14million a day.
What is the amount available for EXPORT that is the only number that should concern people.
The bottom line.
The Net number.
What's coming on line,
What's depletion,
What are they consuming internally.
What is offered for sale??
I agree with your post, but unfortunately more catastrophic scenarios must also be taken into account -- like what if as a consequence of military action or threats, the decision was made to destroy the oil-producing capabilities of an entire nation. Say, for example, that nation was SA.
What If Saudi Arabia Did the Unthinkable and Blew Up Its Oil Wells?
Some may deem this outcome unlikely, but you never know....
PS: I'm sure that it's the environmental aspect that they were worried about, in the war that was supposed to pay for itself :)
There's that same issue again. Way I see it,slightly immoral to be sure, is that say I have a $700,000 McMansion. Peak oil comes and its basically worthless. Why should I spend reserves or cash I have now or shortly to pay the damn thing off? Or anything for that matter since I am a doomer(spell that pragmatist) then instead I would take that income and find a more reasonable area and lodging to survive in. Buy supplies,firearms and whatever to prepare and then just walk away , or run as the case may be, from that insignificant worthless property and go to the other, seeing it all coming down that is.
So again. Why pay off something that may be of absolutely no value and you would lose anyway?
In fact twere me I would be selling right now however the real estate bubble appears to be rapidly deflating and soooo....well you shouldn't have brought it in the first place, now there is the devil to pay.
Again. Walk away now while you still can unless you have already resigned yourself. Many have so I read. A pity. There's that old Murkan 'can do ' spirit. Olduvai Gorge awaits. Maybe flintknapping classes can be found. Whatever.
Hey be sure to join a nice rightwing Christian church full of deer poachers and lawbreakers with big guns. Suck up to get accepted. Work the circuit. Get your neck reddened up.
I figure these boys can still churn out some white mule(moonshine) and good whiskey needn't be scarce then even if oil and sech is.
Now consider the fate of someone with your supposed $700,000 McMansion. Say the market value has dropped to $350,000 at the same time as his income has dropped. The poor fellow was a GM salesman and his wife worked at a recently closed Ford factory. Total monthly income has dropped from $15,000/mo to $7,500/mo. The couple goes to bankruptcy court and pays about double the fee I did. They enter into a court ordered lowered credit card payment plan which eliminates all interest payments and they default on the mortgage. They have 12 months and thousands of dollars available each month to readjust to a lower cost lifestyle perhaps in a financially better location. The bank is stuck with a property no one can afford. Now multiply that scenario by one million and what will the banking system do?
I'm very interested to know more about how this works (defaulting on a mortgage). I just sold a suburban house and bought a house in the city because I believe the house in the city will allow for a better life as fuel costs increase and because I believe the property will retain its value compared to the house in the suburbs.
However, I've taken on more debt in the form of a bigger mortgage to do this. At this point I'm able to cover the mortgage comfortably, but who knows what's around the corner with employment (I have a job that is reliant on the entertainment and construction industry).
So, Let's say I can't pay my mortgage because my employment situation changes? What is going to happen? Respond here if you like, or you can email me at tandersonbrown at yahoo dot com.
Thanks,
Tom Anderson-Brown
Economic collapse does not equal collapse of creditors' databases, let alone civilization. The legal system, police and military will doubtless persist for an unpleasantly long time. See Great Depression.
TPTB likely anticipate said collapse, to say nothing of their anticipation of the end of growth, hence capitalism.
So what does that have to do with walking away from your McMansion & unpayable mortgage? Well, if capitalism fails, there is always feudalism. Unpaid dept will become your ticket to debt servitude, with today's creditors as tomorrow's lords. Why do you think the personal bankrupcy law was eliminated in all but name last year?
justice system , filled with legal people, law enforcement and all the rest of the retinue of civil servants and such.
I submit that with choas, no fuel, lights out and little food that it would not be surmisable(a word?) that the civil idiots would be out beating the bushes outback for debtors.
Notice I implied TEOTWAWKI. Chaos. Joe Bageant and J. Kunstler meltdown time. Back to the Olduvial Gorge time. Campout time for the ex-boyscouts only you don't get to go home when campweek is over. You get to stay in the woods with your offical Boy Scout knife and canteen forever.
I have posed this question before and received the same responses so I assume the respondees are basically cornucopians blowing the Horn Of Plenty.
You got to get more into the scheme of it and forget those worthless debts. Paper money will be meaningless.
Think BARTERTOWN(Thunderdome and Beyond).
If you want pink clouds and soft cushy landings then by all means be sure to start paying off those incredibly stupid loans for those houses that are now flooding the marketplaces.
Myself? I would get a good dirtbike. A good AK or AR with lots of clips , a bugout bag and some good maps of choice free(national , state forests) land and start caching some stuff there. Shouldn't cost much to do and better than rotting in suburbia and awaiting the bill collector with a happy shiny face.
Excuse me while I go take a quick puke.
Peace!
If you feel your life is threatened you have the right to use of deadly force.
Better to first survive the fight and THEN deal with the courts.
If you have a concealed deadly weapon permit(CCDW) you will always be prepared to hash it out with burgulars.
You said 'the average person' so I do agree with you there. We should ALL becoming more than just the average person. Unless you expect to die off anyway and so then basically the debate is over on that issue.
There are few oil wells nearby. Got good clear running springs though. I would trade the oil well for a good spring .
Those were the good ole days, I wish I could bill out now like I did then. There was serious potential for a problem there. An awfull lot of people took action prior to the problem. Drop this one it's old and wrong.
I have tried to live off the land; it ain't like in the old days (if it ever was -- the Army did a pretty good job of making Apaches surrender once they couldn't raid anymore).
Unless you poach cattle, you're going to starve pretty fast. If you poach cattle, the posse will get you.
I figure people who take the dirtbike and AK-47 for a one way ride will last a few months, at best. The folks who would survive teotwawki (if such a thing were to happen) are Mormons and others who farm, ranch, and, most importantly, work together as a community. Survival as an individual isn't really feasible, and doesnt' have much meaning -- even if it were feasible.
There is no way to escape this problem, with the exception of moving to an island in the middle of the sea, and even then you'd better hope it's pretty high above sea level as we may still end up with global warming and rising oceans. Come to think of it, New Zealand might be an ideal place to move to. Fairly isolated. Fairly low population. Fairly good environment for farming.
See some of my posts in this thread.
I see things similarly.
Just read a couple of things by Joe and tend to completely agree with his assessment.
Assuming doom and doing nothing would get you kicked off the island.
If you stop paying right now, you may be in deep financial doo-doo in a year with the tax man. (Since you have to pay tax on the part of the loan that remains and is "forgiven" after foreclosure). And as far as not paying taxes - that can land you in jail.
But if the collapse quickly leads to long-term chaos - I am right behind you in line to do this. Just let me know when.
Thanks for the kind words--I'm trying to warn those who will listen.
I think that we are seeing some significant impacts now, primarily among lower income people in the US and in poorer countries around the world.
Note that the US has had a net negative national savings rate for over a year. That is why the crap being spread around by CERA, ExxonMobil and Saudi Aramco is so pernicious. They are giving consumers precisely the wrong advice at precisely the wrong time.
I have been repeatedly advising people to start making hard decisions this year. Assume your income drops by 50%. Assume energy and food prices are at least 100% higher. How would you change your lifestyle?
As I have repeatedly said, if I am wrong, you will have a lower stress way of life, little or no debt and more money in the bank. I have nothing to do with George Ure's website, but he has a pretty good little PDF file that you can buy for ten bucks that gives you advice on how to live on $10,000 per year, and I am sure there is lots of other stuff on the web, especially regarding the voluntary simplicity movement.
One of the cold, hard realities that we are facing is an emerging labor surplus. It may be somewhat ruthless, but by cutting your spending relentlessly, you can put yourself in a position to survive wage cuts, or to volunteer for a wage cut (to prevent yourself from being laid off). This one of the ways that I survived the Eighties.
A lot of debate has gone on about inflation vs deflation in the coming 'crunch' (for those of us who see a coming crunch). It is painfully obvious though that cost of labor will be extremely deflation-ridden. Even if prices of consumer items remain relatively stable, high unemployment will equal higher virtual prices for those with no bucks to spend.
Speculation ahead
You know that I am a fast-crash, worst case doomer [but certainly not advocating for the worst], trying to visualize less dire, maybe even workable solutions.
I believe that Peakoil WILL NOT create a labor surplus and high unemployment--in fact, just the opposite. Recall my earlier postings whereby we need to go from our current 0.7% farm labor [source: CIA Factbook] to 60-75% Permaculture labor to prevent starvation. Recall that Zimbabwe is now at 60% farm & localized permaculture labor, and failing miserably. There will be no shortage of work ahead to massively convert our lifestyles to permaculture and biosolar Powerup as we race food shortages induced by detritus entropy. Recall how TODer Westexas predicts illegals and college grads working together to bring in the harvest.
Other young, robust men will be pulling loads along canals [see my post near bottom of this thead], busting reinforced concrete and asphalt with sledgehammers, and building RRs.
Another idea of mine is to build a national spiderweb infrastructure of drinking fountains. PostPeak, some high value goods will pedaled on cargo-trikes from the coasts to the interior regions. This will be very-taxing work: these pedalers can best be served by having a shaded resting place and drinking water every 5-10 miles as they criss-cross the country.
Seven time Tour De France winner Lance Armstrong can cover a remarkable distance in a very short time. But we need to remember that the food and water during a race is handed to him from a pursuit ICE vehicle--That won't be possible in a PostPeak world. A gallon of water weighs 8.34 lbs, the least we can do is build a national drinking fountain spiderweb so this water requirement won't have to be pedaled too.
There are freeway stretches in the Southwest's deserts that would be lethal to a bicyclist, if his bicycle broke, or he ran out of water. We need to remember that postPeak, at some future time, there will not be any ICE ambulance or helicopter rescue--we need to prepare before.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
More Speculation ahead!
Most of you are aware of my prognostications on the inevitable rise of large, contiguous biosolar habitats protected by Earthmarines, who will undertake a very solemn oath to: protect at all costs, the species of the land & water. In short, they will kill a small female child before letting her eat the very last raspberry, carrot, tomato, etc, on the planet. For emotional clarification: recall the little girl in the film of Spielberg's Schindler's List. Otherwise-- global Easter Island is our fate; Leanan's Catabolic Collapse.
For example, recall my now ancient post whereby two Somali clans went to gunbattle over a small stand of trees: one clan wanted to harvest the firewood now, the other clan realized how vital the forest was to the continued health of their eco-system--the classic resource battle of detritovores vs biosolars. This is our postPeak future unless we start meaningful mitigation.
Recall, before the discovery of FFs, that a nation without tall trees could not be a maritime power. It would be mitigatively wise, if the President declared certain areas now: to be planted with the proper species of trees that we can harvest later for the essential tall masts required for wind-power ships. This would keep us from later raiding the last old-growth forests and really wrecking our eco-system. My hypothetical Earthmarines, pledged to long term sustainability, could start off by planting these trees, then postPeak moving to protect them from the masses of people that will ignorantly want to cut them down for mere firewood. If America cannot even protect tall trees for use in later sailing ships--the Decline of Empire will be total.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Even though we share a similar view of the future of society, we certainly differ when it comes as to what happens.
People will be no different than the wild pigs and bears that wreaked havock in my garden and orchard this year. They wanted a meal now and took it regardless of tomorrow's meal. Humans will be just like them, a hord of locusts turning everything in their path to dust. I can certainly see people eating the last seed of a number of open pollinated grains and vegetables I spent years developing.
But, what will keep this from occuring won't be Earthmarines but rather local folk who have come together to keep them out, i.e., kill them as they arrive. I realize that this is hard for non-rural people to understand, but they will be seen as "pests." I had to shoot and poison a lot of animals this year. In fact, it got old having to grab a gun every time I left the house but that's the way it goes. I took no pleasure in killing but it had to be done.
The people who survive will become the equivalent of your Earthmarines.
Todd; a Realist
Wonder if some of your scenarios made it into the adventures of C.C. Eggum? I thought I seen some of mine about rotting potatoes, or maybe not.
Don Sailorman's exposition.
Good writing.Like his style.
airdale--keep ur powder dry. I am taking up blackpowder BTW.
one shot but it works and scares the hell out of 'pests'
The only black powder thing I have is an antique, engraved no less, percussion-cap, side-by-side shotgun. It's smaller than 12 ga and I have never tried to fire it. The only other antique gun I have is my grandfather's Spanish American War rifle. It chambers a .410 shotgun shell but it won't fire them. I have to admit that when it comes to guns, I'd buy a 1911 .45 first before a black powder gun.
As far as the critters go: This has been a rough summer for game. I'm coastal northern CA and it has been hotter than usual with zero summer rains. Wild pigs have been around for years (we've lived on this property for over 25 years) but have never been a problem but they have no food. Bears always come through each year. We try to let them go their way but have trapped several over the years. The biggest was over 500# and would have killed anything it came in contact with including us.
In the case of the pigs, I shot several who went to other peoples freezers since ours is full. The weaners probably died from eating an anti-coagulanet bait I put out and a few bears may have died from it too since they never came back to the orchard after eating the pigs bait.
Starving animals are never frightened away regardless of what you do. You have to kill them. Had this been a SHTF scenario, I would have spent the last month on guard duty.
There's a lot more stuff but TOD isn't the place to go into it.
Todd
Thxs for your thoughtful and wise reply. You maybe proven correct--still too early to tell how the whole shebang will paradigm shift. Have you seen the EB link by John Michael Greer?
If the fast-crash postPeak future is our fate, I hope to be wearing a t-shirt or jacket that says Team TOD--this will give you full free-fire permission to put me out of my profound misery -- you seem like an excellent shot who won't flinch at the last millisecond.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
I hadn't read that one. Weasel words since he has no more ability to see the future than you and I...but I think we are correct.
Todd: a Realist
But this is Maine, (not the southern part that's more like New Hampshire or Mass wannabees) Lots and lots of miles here. Up here, we still have families that need to bag 2 deer to survive the winter. Mostly the community makes sure they have the tags. Every once in a while, when they get caught, it's the game warden who does not make it out of the woods. Everyone is very sad at that point.
Most people have no clue, how hard it is, they board the fluffy dog when they go on vaction. People seriously producing food do not get vacations. The animals need food and water every day. A huge percentage of our population would consider that as impinging on their free time. I guess the term is ego-centric.. nothing will get in the way of these peoples focus on themselves.
Or we blow a lot of small bridges between us and them. And we block the grade so they have to walk the hill. And block the 3 miles thru the canyon with a lot of trees. That'll be fun; we'll dress in camo and be Minutemen, and they can dress in red like the Brits. Home field advantage is everything.
I really don't like the sound of that coming from my keyboard, but I'm afeered you're right.
I don't think the world is gonna look like this.
I love the irony; hippie Rat with a shotgun. I thought I was finished with that a long time ago.
Peace
M
The posited social system behind this scenario seems to me to be explosively unstable, rendering the scenario highly implausible. After all, any group invested with this much summary power is overwhelmingly likely to evolve into a highly dangerous bunch of berserkers in short order. And those habitats will be extremely fragile, and thus highly vulnerable to berserkers.
If that ever came to pass, we'd all ready be screwed. And we'd have done it to ourselves, so good riddance.
I understand how you would be offended. It deeply offends my sensibilities too, but it is already happening around the world TODAY where desperate resource wars are occurring. See my Somalia post in this thread, Google Sri Lanka, Darfur, The Hutu-Tutsi Machete' Dance, etc-- when it comes down to pure survival over access to water, food, land-- we are all Collateral Damage.
Imagine, for the next 100 years, the worst case of anarchy and catabolic collapse imaginable with 300 million raving American souls. Maybe 5 million survive-- I can't easily visualize this--it makes me sick. TODers Darwinian and others post about this much better than me. Scientist, inventor, and writer James Lovelock says 2 million max worldwide at the North Pole---Yikes!
Far better to have some kind of social system [not infinite growth!] that mitigates this to have 50 million survive; a whole magnitude better! This is only, repeat ONLY, possible if we protect our ecosystem as best as we can. We eat carrots, not carats, gold, or paper funny-money.
I speculate that Earthmarines will understand the need for carrots, raspberries, goats, and trees, and will try their best to avert the wholesale Tragedy of the Commons-- which will bring ruin to everyone. Large biosolar lifeboats much, much bigger than Noah's Ark, which only had to float for 'forty days and forty nights' for those of a Christian faith.
My speculation is just that. I fervently hope it does not come to pass, and some genius will think of a way for us to avoid detritus entropy and Overshoot, but I don't see how. I am only a dumb Dodo bird.
I spend countless hours trying to think of proactive solutions: everything from my 'steelies', to drinking fountains or water cisterns every five miles, to abolishing streetlights that glow all night trying to get black asphalt to reflect photons. We all need to be thinking outside the box for the challenges ahead.
From Dieoff.com:
------------------------
Despite the madness of war, we lived for a world that would be different. For a better world to come when all this is over. And perhaps even our being here is a step towards that world. Do you really think that, without the hope that such a world is possible, that the rights of man will be restored again, we could stand the concentration camp even for one day? It is that very hope that makes people go without a murmur to the gas chambers, keeps them from risking a revolt, paralyses them into numb inactivity. It is hope that breaks down family ties, makes mothers renounce their children, or wives sell their bodies for bread, or husbands kill. It is hope that compels man to hold on to one more day of life, because that day may be the day of liberation. Ah, and not even the hope for a different, better world, but simply for life, a life of peace and rest. Never before in the history of mankind has hope been stronger than man, but never also has it done so much harm as it has in this war, in this concentration camp. We were never taught how to give up hope, and this is why today we perish in gas chambers. -- Borowski, pp. 121-122 Here is the full horrific article: THIS WAY FOR THE GAS, LADIES AND GENTLEMEN, by Tadeusz Borowski, # 119198
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If pressed for time, watch this video on Youtube. Only six minutes long, but it lasts for an eternity, then extrapolate to Seven billion souls.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
A spiderweb of drinking fountains!!!!
Now could YEAST come up with that idea?
Think more like oldtimey cast iron hand pumps.
airdale--I use yeast to bake with. Believe me...its mindless.
Thxs for responding, but I respectfully request you go back and reread my posting. "Infrastructure" is a non-descriptive word--hard to visualize. But everyone can visualize a national "Spiderweb" of piping, springs, cisterns, small drinking fountains, and yes, even old time cast-iron hand pumps laid out across the country so everyone has access to potable water. Consider the alternative: please carry a 5 gallon water jug in each hand for a mile without stopping, then report back to me.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
I believe canals will prove very useful in a power-down
world. I piloted my own boat through many of Europes canals and have some familiarity and fondness for canals. I think
the older more primative canals will prove to be the most
useful because the locks have manually operated gates and
they usually have tow paths. The newer canals have massive
electrohydrolically operated gates and require a lot more
infrastructure and energy for their operation. In the 19th
century a canal boat typically required a crew of three.
A man to pilot the boat, a donkey to pull it and a boy(girl)
to guide the donkey. Of course loading and unloading were
very labor intensive. I towed my own boat (7 tons) experimentally and was surprised at how little effort was
required after overcoming inertia. I realize towing 40 tons for 12 hours a day would be a whole different thing. To bad
the USA did not build more canals before trains took over
the carriage of freight.
One problem canals may face in the future is insufficient
water. We all may face that!
Biosolar habitat good. Mammal power not good.
How much longer can this go on? Esp. with the stagnant/declining real estate market? This crisis may hit before peak oil does...
Though I was afraid that was going to be the answer.
I've been able to piece together parts of your bio from your posts over the months, but it would be interesting to see it all in one place. Your career in the oil industry, your financial hardship, your realization of peak oil, etc.
A good (but not great, IMO) book which espouses much of your advice is The Millionaire Next Door. The basic thesis of the book is that in order to build true wealth you must live way below your means and save and invest your excess income. The book even defines a formula you can use to see if you are a "prodigious accumulator of wealth" or an "under-accumulator of wealth."
I think a mistake a lot of people make, and your "Iron Triangle" is only too happy to exploit, is the notion that consumption is a sign of wealth. It is not. Consumption is a sign of spending, and spending is a sign of not saving, and for many, going into debt. The truth is that saving is not glamorous and is unlikely to impress your neighbors because it is not visible. Saving and investing, along with the power of compound interest, also offers little in the way of immediate gratification. It is a long-term, multi-year, even multi-decade, endeavor.
(I'm aware that compound interest may not survive peak oil. That's one of the reasons why I read this web site).
I am doing somewhat better than the Eighties, but our "new" car is six years old. The older car is ten years old. Deflation is new experience for a lot of people, but for oil patch folks, been there. . . done that. It's amazing thing is what happens to an industry when about 80% of the net cash flow evaporates in a couple of weeks.
BTW, the Peak Oil debate on the McCuistion program will be broadcast locally in the Dallas/Fort Worth area on KERA, Channel 13, in two parts, Sunday, Sept. 17 and Sept. 24, at 11:00 A.M. It is supposed to be shown nationally in other markets, but they don't have the schedule yet.
There were four panelists, yours truly, a local oil operator, an ExxonMobil representative, and a consultant recommended by Saudi Aramco. Michael Lynch called in from Tokyo. One of Lynch's counter-arguments seems more bizarre the more that I think about it. He argued that the UK was was an example of the HL method not working. Of course it works great for the total North Sea, but the bizarre part was that Lynch was citing the example of a country whose production is crashing to refute my Peak Oil arguments. Kind of strange.
Solutions to the peak oil challenge are currently political and the window for political improvements is maybe 5 years wide. America had a similar chance in the late 70s and we blew it all away in November of 1980.
Now, we have rising imports and falling prices. Coincidentally, U.S. refinery utilization has been maxed out lately, and all of the gulf oil production has been back on line for a few months. Now, if my hypothesis predicts falling imports and rising prices, and I use this as evidence when this scenario unfolds, I have a problem when the opposite happens, as is the case now.
However, in the grand scheme of things, we are on the same page. I think we are in a lot of trouble, I just think we have to be careful with the evidence. If we use evidence that is later falsified, we open ourselves up to serious doubters just when we need to convince people to act. However, I definitely believe we are within the 20 year time window within which Hirsch declared that we need to aggressively act. Peak might not be now, today, but we would be better off in the long run to prepare as if it were. So, even though I dispute some specific pieces of evidence in his export hypothesis, we agree on the overall message.
As Robert mentioned, we have been down this road before, but I was not building my export case based on US oil import data. I did point out the anomaly of falling US imports and rising oil prices. In any case, in regard to the US, we are the biggest oil consumer, but we are "only" about 25% of world consumption.
My concerns about exports arose because of the analysis of the HL data, to-wit, that the top oil exporters are more depleted than the world is overall. In January, 2006, I specifically predicted, in a TOD post, that we would see declining net oil exports this year.
Based on the EIA crude + condensate numbers, someone is being forced to cut back, since I estimate that the exports from the top 10 net oil exporters are down 4.6% from 12/05 to 6/06 (annual rate of 9.2%).
As I outlined in this thread, I simply don't see a realistic scenario for rising oil production when the four largest producing fields are almost certainly all declining or crashing.
A number of times you have mentioned the thinning oil column in Cantarell. As I understand, Cantarell is a fractured formation which would imply a number of oil columns. Is the 825' referring to one main part of the overall reservoir, or do I just understand this incorrectly?
The 825' number and the thinning rate was taken from the WSJ article this year, which in turn was taken from a leaked internal Pemex report which laid out five decline scenarios, with the worst case suggesting up to a 40% decline rate per year.
I am not a Cantarell expert, but the numbers quoted in the WSJ are very, very scary, and the recent data seem to suggest that something close to the worst case decline rate is occurring.
I think I will make my kids read it to more clearly understand why "the old fella" has erected wind turbines, Solar Water & PV panels...
Incidentally the Prudhoe Bay corrosion issue. In the UK Media, (BP being a national icon) there was a lot of head scratching as to how exactly a pipe that should have oil in it, could possibly be corroding..
The explanation was to do with Eddy-currents and magnetism -
At that point most people shook their head and went back to 'Big Brother'.
...but of course if the fluid inside is 75% water that would explain it!
Thanks fellas
Jenks.
CP protects the outer, soil-facing skin of the pipe. The inside of the pipe doesn't 'see' the protection. The Office of Pipeline Safety has some CP info on their site.
And CP is hardly panacea. It's notoriously difficult to get just right because of the enormous range of variables and semi-empirical nature of its design. Annual soil moisture variations, decay of the anodes, and other variations in the variables keep the crud guys tweaking the systems. OPS mandates 6 checks per year.
Corrosion requires 4 elements: two materials with different galvanic potential (different voltages when referenced to a common material), an electrolyte, and a return path for the electrons. Inside a pipe, the weldments provide a material that has a slightly different galvanic potential than the base steel. The pipe itself provides a convenient return path. So just add water in the right spot and -- presto -- garden variety galvanic corrosion. Underfill your pipe for a few years because the field is depleting and it's small wonder that they have issues.
All pipelines have some amount of water in them. You just can't completely eliminate the stuff. Crude oil comes out of the ground with some associated water. And diurnal breathing of storage tanks ensures that some moisture gets back into the finished product. Many storage tanks are vented directly to the atmosphere to prevent a vacuum from forming as you pull from the tank and to prevent overpressure as you fill it up. The day's high temp causes an ever so-small amount of air to get pushed out of the tank. The night's low sucks in some (generally) moisture laden air which will condense on the nice, cool steel. Repeat every day for the operational life of the tank. Drawing water out of the tanks is a routine maintenance chore.
An intriguing thought is if Prudhoe is a harbinger: as flow rates decrease across the board, will more pipelines become more susceptible to corrosion issues? Hmmm, inquiring minds want to know. Pipelines are generally operated well into the turbulent region of flow for a variety of reasons, one of which is to keep water and other nasties suspended. When flows start to approach the laminar region, the water drops out and starts doing its job as an electrolyte.
The amount of water that can create hell is quite low, especially if you have separation of the phases. It will pool in low, quiescent spots and go to town.
You are right to repeat yourself, with or without modification. Keep posting this argument early every day.
Your effort will benefit all of us.
Thank-you.
As always, reality will out before long.
Today, it is all different. The new monarch has embraced oil at $60+, and has kicked the USA military out. One of the unrecognized stories of the US invasion of Iraq is that the US had become deperate for a location for military bases after being expelled from KSA. And the reason oil will never return to $25 per barrel is because KSA will now act in their own interest and not the USA's. They are the swing producer, and they will swing. If the market is flooded with oil, they will shut down production, and they have. They are doing it right now. They only need to export about 6 million barrels per day to run huge surplusses if oil stays at $60 per barrel.
The king is dead. Long live the king. ...or this is not your father's king.
I also think the Saudi about face is probably likely to their being unable to produce enough oil to keep the price down anymore.