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40 comments on A small supplement on LNG supplies

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brook on March 10, 2006 - 4:46pm Permalink | Subthread | Parent | Comments top
One of the fascinating things about Peak Oil Theory (at least to me) is that it brings in elements of many disciplines.  Geology is critical, as is economics.  I expect as well that politics will be at least as important as physics in determining how well we collectively fare in this crisis.  Frankly, the politics of peak oil is the part that makes the least sense to me.
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writerman on March 10, 2006 - 5:26pm Permalink | Subthread | Parent | Comments top
Your perfectly correct. In much the same way that oil and gas form the enegry foundation for the whole structure of our society, the problems associated with Peak Oil Theory inexorably suck in almost everything, almost like a black hole star.

You're right too about the politics of the whole thing. It's not as if we can measure or quantify it. Here at TOD we've had so many models, graphs and numbers, which are used to explain the physical nature of Peak Oil. How much have we really got, where and for how long etc. We're measuring the past, now and trying to measure the future. That is hard enough to do even though we're dealing with the physical world. But politics is far harder to understand in many ways.

Individual human beings are hard to understand and lots of them together seem to be even more difficult to understand. What concerns me about much of the politics is not partisanship or mere sectarianism, or Left and Right, or Republican or Democrat. These are essentially labels we use in order to define social reality as we perceive it.

What concerns me in this respect is people who appear to believe their own political rhetoric to the point of fanaticism. Such people exist across the spectrum and they scare me. Factor in "religion" "faith" "fear" and our collective, emotional response to war; and one has got dangerous brew on the boil at the moment.

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TrueKaiser on March 11, 2006 - 12:02am Permalink | Subthread | Parent | Comments top
you are quite correct that if anyone fails to factor humans into the peak oil equation is doomed to fail from the start.
while i hope for a power down scenario to win out it has become increasingly clear that it was thought up without considering the human factor.
in other words while it, along with capitalism and Communism, which all work on paper always fail in real life.
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dipchip on March 11, 2006 - 10:36am Permalink | Subthread | Parent | Comments top
The physics and geology of energy is like herding cattle you can drive them in a specific direction. The politics of energy is like herding chickens before a storm, each must be confronted on an individual basis or they will scatter to the 4 points of the compass.
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oilaholic on March 11, 2006 - 3:57am Permalink | Subthread | Parent | Comments top
To me, the most interesting aspect of politics in re: PO is that at some point - once the implications of our being at or near peak begin to seep into the mainstream - it seems inevitable to me that oil exporting nations will stop producing at their maximum capacity because they will come to see that their own ability to grow their economies will require nearly all the oil they have in the ground.  Plus the price will be so high that they will not need to produce at the maximum rate to obtain sufficient foreign exchange.

In that environment, the Chinese will become even more desperate to secure their oil supplies.  This will take more oil off the free market due to the bilateral deals China has and will continue to negotiate.   It will also raise the bidding from the standpoint of military tension.  In that world, I can see China offering, say, Iran it's own nuclear umbrella.  Saying in effect that China will guarantee Iran's nuclear ambitions in exchange for a bilateral oil deal.

The implications of these changes in mindset are orders of magnitude more important than considerations of potential energy substitutes or whether or not (when in my view) the US makes a tactical air strike against Iranian nuclear assets.   Not saying all aspects of the discussion are not useful and important.   Just that when one considers the millions of bpd of oil that may come off the free market from exporting countries when their mindset changes from the current maximum production to the future minimum production consistent with a given export revenue objective - and when China sucks even more supply off the free market - all other considerations will pale .  

The other consideration which I find fascinating and little discussed is the implication of the prospects for a no-growth economy or even a decline in GNP implied by PO on the multiple accorded to corporate earnings in the stock market.  I find it hard to believe that when a no-growth mindset begins to take hold, there will not be the largest decline in stock prices in history.  

That, of course, will have the effect of lowering demand for oil, as a number of writers have pointed out.   On the other hand, even if you postulate that a reduced post-peak supply of oil is able to satisfy a much-reduced depression-effected demand, the fact that oil supply has peaked will still be in the market's mind, so all slack supply will be used for inventory build.  Therefore I doubt the price of oil ($250/b? - $500/b?) will be reduced, even after a depression.

To me, it is the impacts of the change in mindset that will have the most vital and least discussed impacts on the market for oil and on societies around the world.

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Gets IT on March 11, 2006 - 5:56am Permalink | Subthread | Parent | Comments top
That is a hellofa good scenario.
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ChrisPhoenix on March 11, 2006 - 11:30am Permalink | Subthread | Parent | Comments top
Hm. This has me thinking wild suppositions. Of course I'm not an economist, and this is probably wrong. But is it possible that GWB's weakening of US economic fundamentals is crazy like a fox, playing brinkmanship with the world economy in order to force low oil prices?

Let's suppose that oil countries confronted with peak oil will want to export the minimum oil consistent with a certain income. Let's suppose further that they already know about peak oil, and know that even small cuts in supply will drive price up to levels that will give them lots more money.

The function of oil consumption vs. oil price is highly non-linear. One of the major features is that if the oil price goes too high, major economies will implode, and then the whole demand/price curve shifts majorly downward. Oil exporting countries don't want that.

A few years ago, people were thinking that $60 oil would cause a problem. Well, apparently it hasn't ... yet, at least. But $120 oil would cause a problem ... right? Well, maybe not, at least not for the US; energy is still only a fraction of our budget, and we could eliminate a lot of waste. And as long as the US economy doesn't implode, China can still sell us stuff, so they won't implode either. And with US and China going strong, the rest of the industrialized world has lots of markets.

Of course we in the US don't want $120 oil. But if we could survive $120 oil, peak-aware exporters would give us $120 oil. So what do we do? We weaken the foundations of our economy until we can't survive $120 oil. Now the oil exporters have to keep producing enough to keep the price at $60, because if they let the price get too high, demand for oil will fall along with the global economy.

Chris

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SqueakyRat on March 11, 2006 - 5:47pm Permalink | Subthread | Parent | Comments top
Try to remember who you're talking about, Chris: GWB.
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ChrisPhoenix on March 13, 2006 - 1:32am Permalink | Subthread | Parent | Comments top
Well, GWB and/or his advisors. Reminds me of recent political cartoon: Cheney tells his aide, "Tell the man in charge that I shot someone." The aide replies, "Sir, you shot someone."

So, not GWB himself, but his administration, might be smart enough to pull it off. After all, they're smart enough to make half the American public think that Iraq was involved in 9/11. They're smart enough to get budgets and plans through Congress that misstate billions upon billions of dollars.

Chris

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jkissing on March 13, 2006 - 7:14pm Permalink | Subthread | Parent | Comments top
The administration's success has more to do with the intelligence of 1/2 of the american public and congress than the intelligence of the administration.
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wkwillis on March 12, 2006 - 7:11am Permalink | Subthread | Parent | Comments top
What concerns me is that synfuel plants require steel in large quantities. We don't have a steel industry that can ramp up quickly anymore. We need all the accessory bits as well as blast furnaces, too. We need to build the plants to build the steel mills to build the synfuel industry. Figure on five years, minimum. That's assuming we have a coordinated national program with at least price rationing of critical path equipment and resources. Just building the coal industry up to the level of synfuel capability is going to be a huge job.
China has a much larger steel industry than we do and so synfuels are a simple problem for them. They even export coal. In the case of oil cuttoff from the Gulf they are much better placed to succeed then we are. Look at them as being about eighteen months from imported crude based fuel replacement at any given time.
Bush, Jr, did attempt to put a tariff/quota on steel imports before he got overrun. It wasn't much of an effort.
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Don Sailorman on March 12, 2006 - 3:34pm Permalink | Subthread | Parent | Comments top
Very good point; here in Minnesota we still have plenty of taconite (relatively low-grade iron ore, but abundant) but it would take some time to, say double, output. Also, I suspect the equipment and skills needed to get at tar sands are very similar to those needed to get the taconite out of the ground and made into pellets (which BTW are the best free slingshot ammo ever made IMO and available for the picking up along rail beds).

Also, where would we get the ore carriers and the freight cars needed to double output?

Hm, maybe I should buy another couple hundred pounds of rice and oatmeal . . . .

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wkwillis on March 13, 2006 - 7:53am Permalink | Subthread | Parent | Comments top
There are PERT charts that could be made about this...
Some things can be done in parallel, for instance, you could build a tube mill for pipe and at the same time be holding classes for welders so that when the tube mill was built, the welders would be ready to weld it into a synfuel plant. Ditto building roads to make coal mines able to get the coal to the railroad spur being built at the same time.
But some things have to be done in serial. Like first you find a mineral deposit, then you analyse it from electrical, magnetic, gravity, and seismic surveys, then you core drill anywhere interesting, then if it is indeed interesting (ie, the surveys gave you a clue about the rock, the core told you if the anomaly you were measuring was what you thought it was), then  you grid drill to find out if it's big and rich and friable enough (the mineral not only has to be there, it has to be recoverable after you grind it), then you grid drill to find out where you should start digging first, then you start digging and laying in the rail spur and building the smelter or whatever. A crash program to build a mine is five years. Usually it takes twenty if everything goes right. That's not a joke, that's the way it is.
Building a synfuel plant is a comparative cinch. Building a windmill farm or a solar field is even simpler.
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Don Sailorman on March 13, 2006 - 3:37pm Permalink | Subthread | Parent | Comments top
In Minnesota at one time we had many of the finest mining engineers and geologists in the world working on the iron ranges (There are actually 3 of them.). These guys mapped out in great detail where the ore is, how much, and how good. For example, under the town of Bovey in Minnesota is a fair amount of good ore: To get at it all you would have to do is remove the town. But there is plenty of taconite, and the technology of getting at it is pretty simple, and so I do not think it would take strip mining long to get restarted--were it not for bottlenecks in big tires, rail cars, ore boats and possibly [don't know] seamen and officers to man those ore boats.

The ships are huge, and navigating on Lake Superior in bad weather is not something you want to do with 90-Day Wonders.

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writerman on March 11, 2006 - 12:53pm Permalink | Subthread | Parent | Comments top
I agree that at some point in the not too distant future we will see a sea change in the attitude of the oil producing/exporting nations. For a variety of reasons they may well decide to reduce exports. Many of these countries will need the oil themselves for their own economic development and the oil is going to worth a lot more in the ground etc.

Unfortunately I think adopting such a policy on their part, thought prudent and logical in many respects, would almost be like committing suicide and asking to be invaded by oil hungry nations - and we know who they are!

Five, ten or fifteen years down the line, Europe, China, India and Europe are going to be importing a lot more oil than they do now. We're talking about a roughly 25% increase in world oil consumption, unless we hit a deep recession, which will bring on a whole bunch of other problems we don't need to go into here.

Seen in this perspective, curtailing oil exports by Russia and OPEC as a matter of policy would be regarded as an act of economic warfare in my opinion. We would literally be being starved or strangled by these nations, and there is now way we're going to accept that. Were talking life and death here!

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oilaholic on March 11, 2006 - 8:23pm Permalink | Subthread | Parent | Comments top
A couple of problems with your post:

  1. Nobody is going to be importing 25% more in a decade or two because the oil won't be there to import.

  2. The exporting countries are not dumb enough to say they are hording the oil.   What they will say is:  we got depleted.  It ain't there.  So who's to know?   Russia and Kuwait have already laid the groundwork for this.
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jkissing on March 13, 2006 - 7:21pm Permalink | Subthread | Parent | Comments top
Hitler tried invading russia. Don't think we will. Kuwait and Suadi are our dear friends, or certainly they get along very well with the administration, congress, and the integrated oils... They will all simply say they are doing everything possible... We will anyway by then have noticed how successful we are in increasing oil imports of those countries we invade...
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