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This chart is a recreation of the one that Stuart Staniford updates every month on The Oil Drum to track the occurrence of a peak or plateau in oil production. There is one major difference. I have included the data back to 1995, doubling the time frame covered. The production numbers are the revised numbers released by the EIA every month. I have also adopted a more horizontal layout, while Stuart's is compressed into a vertically-oriented shape. I am using a 13-month moving, centered average trendline.
I hope everybody will forgive my use of a new thread to post it.
You can see the rise and fall of production very easily.
I think taking it back even further, would give us even more information about future oil events.
And whether the rise and fall is caused more by demand, supply or a combo.
I.E. did the drop in oil production (supply) partly cause the tech bubble to burst, or was demand lowered because of a "peaking" (demand) of the world-wide economy in 1999?
Interesting. So we have had two prior "false peaks." What occured in 1999 and 2002?
One says supply and one says demand.
I'm no expert so I must assume you are correct.
You can see that GDP slows down really a lot in late 2000, whereas the oil production in OilCEO's graph above doesn't slow down until the end of 2000. So GDP changes preceded oil production changes. However, in the current case, oil production growth started to slow down in late 2004, and GDP growth was good until Q4 2005.
Hence it appears that the causality is reversed in the two cases.
We'd have to look at Asian data to see the 1998 events, but I don't have it to hand (nor time to hunt now).
Also, if you've already got a chart you can add another series on a second axis somewhere under the Data menu but I forget where.
I've tried indexing them to a "100" number but then how do you choose what month corresponds to "100" for both except for arbitrarily?
Maybe I'll post some of my best aborted attempts later so you can see what I mean.
Maybe there isn't anything relevent we can draw from the two? Maybe there is, I just can't get a graph to show it.
From the $20+ range in 97, it lowered until bottoming out at near $9 in Feb of 1999.
In Early 2002 it bottomed out at $16 and was much higher years previous.
I think there was an overshoot by oil companies, at least in these 2 cycles, in which they brought to much oil to market. And prices fell, so they lowered the amount produced to bring them back up.
This time looks different.
We have seen this is in many places, such as Texas. The production declines that count are the ones at or past 50% of Qt.
Question: what do these regions/countries have in common:
Texas; Lower 48; Total US; Russia; North Sea.
Answer: Oil production from these regions has never exceeded the peak they saw in the vicinity of 50% of Qt.
The world, from conventional sources, is at 50% of Qt.
That is why I think it makes sense for Stuart to look at the detailed production numbers. These small production declines--and small declines in imports (IMO)--are small pebbles falling down the mountain just ahead of a massive landslide.
The HL method allows us to estimate the area under the curve on a production versus time graph, which is total estimated recoverable reserves, or what Deffeyes calls Qt. The assumption is that production peaks at about 50% of Qt, and historical records support this.
IMO, for HL to really work we need a region with about two mbpd of production for about 20 years.
Unless one produces a field at a high enough rate to damage it, the production rate, within limits, tends not to have a major effect on cumulative production. Therefore, a region, using a gross simplification, can be compared to a bottle full of water. You can pour it out a a minimal rate all the way up to the maximum rate. But the rate that you pour it out has no effect on the volume of water in the bottle.
The two largest discrete regions which have rolled over and gone downhill in the vicinity of 50% of Qt are the Lower 48 and Russia. Russia had wildly inconsistent production data after the fall of the Soviet Union (in 1989), so Khebab and I just used Lower 48 production data through 1970 and Russian production data through 1984, to predict future production using HL
Using only production data through about 50% of Qt, the HL method was 99% accurate in predicting cumulative Lower 48 production through 2004 and the HL method was 95% accurate in predicting cumulative Russian production through 2004. In other words, the water was poured out of the bottles at different rates, but the rates had no effect on the volume of water.
First, this suggests that Deffeyes' prediction that we have used 50% of total conventional oil reserves should be given a lot of credibility.
Second, this suggests that Russian oil production, and therefore its exports, and in fact the exports from the top four oil exporters, are going to be falling rapidly. Thus, my focus on US imports year over year.
Have we seen very sharp production declines? Yes,. Consider Cantarell (the second largest producing oil field in the world), where the remaining oil column is about 850', and it is falling at the rate of about 300' per year.
If the USA does something with Iran whatever it is in the next year or at most 2 years, at least before the 2008 Presidental Elections. Where will oil production worldwide go? Down due to conflict, and stay down for years, and never recover. or what?
ps.
I hate being an information junkie with the DOD on my back. Federal Law is a nasty bedfellow. Growl.
IMHO if Pakistan loses its current leader, They won't own the nukes anymore.
I think that we will see a drop off in oil exports before we see a large overall decline in world oil production.
I think that are seeing a drop off in net oil exports right now. I know that the data are noisy, but what is worrisome is the trend. The drop off in oil imports into the US is widening as time goes forward.
Ponder the impact on US imports of just the crashing production from Cantarell. To predict that we will see increasing production and increasing imports is to predict what historically has never happened, based on the HL model.
I expect to see $100 oil this year. The trillion dollar question is what happens to demand.
Longer term, I think that Simmons is right, i.e., that we will see sustained prices of $200 or more (in 2005 dollars) in 2010.
So the "hidden hand" may constrain oil consumption to what is roughly available, absent any human intervention to reduce demand by other means (whilst keeping our various world economies in decent shape).
A financial panic or recession will indeed shift the whole demand curve for energy products down and to the left, but the problem is that this decrease would be only temporary.
IMO there would be enormous increases in deficit spending and monetization of the U.S. national debt to support such aggressive fiscal policy in case there were to be a severe recession that threatens to turn into a depression.
On the other hand, a mild and prolonged stagflation similar to that of the nineteen seventies and early eighties is another possibilty--and one that would give us perhaps enough breathing space to make a relatively smooth transition to a world of permantently high oil prices, i.e. prices in the range of $150 to $300 per barrel in 2006 dollars.
Your arguments in favor of street cars and electrification of railroads are so strong and so cogent that I think it is only a matter of time before people with big economic and political power read the handwriting on the wall and take appropriate actions. Indeed, high unemployment could turn out to be a well-disguised blessing if it were to provide the impetus for massive public works projects to diminish our dependance on cars and trucks. Also, the impending bankruptcy of GM and the financial weakness of Ford greatly diminish the political power of these huge corporations to use the political process to block changes that would reduce demand for their products.
What should we do with tens of thousands of unemployed auto workers? Put them to work laying track and making street cars.
Don,
I agree with you 100%, and I am spreading Alan's writings as widely as I can. We are kicking around the idea of a Fall conference focused on the issue.
However, even if RR is right, we are likely to see a 1 million b/day drop (annual average) before anything significant can be built (that is, before 2011).
A policy change after the November 2006 election could start the process. A significant amount can be completed and operating between 2011 and 2016 (still more later), but relatively little beyond works already in progress can be completed by 2010 without wholesale changes in design & building patterns*.
IMVHO, the problem is not so much Peak Oil, but post-Peak Oil. A moderate recession can stall consumption at current levels and close to current prices. Reducing demand to meet available supplies is where the "agony meets the road" :-(
* I could sketch out a variety of ways to speed things up AND lower costs. Less than 24 months from ground breaking to operation and with lower costs. Planning & design can be standardized, waivers for certain federal requirements (Endangered Species Act, Art in Transit, urban archeology , near absolute prohibition against routing rail through parks** top my list) and so forth.
In the 1930s, the Presidents of various streetcar lines jointly designed a standard streetcar, known as the PCC. The most successful streetcar in history, out of production just recently in the Czech Republic & Russia. The trucks of our new Canal New Orleans streetcars (in service in 2004) were "improved PCC" design although the bodies were improved Perley Thomas.
In a crash program, standardization might not be optimal, but it may be required for speed.
** One route option in New Orleans was blocked because it crossed a 6 or 8 foot wide "park" on the edge of St. John's Bayou. One cannot move a monument to one side on a neutral ground, etc.
I hereby nominate you as leader of the new Freedom America party and withdraw my opposition to spending $20 billion dollars (or possibly much more) to save New Orleans from Cat 5 hurricanes and global warming. BTW, as a public works project, saving New Orleans makes more sense than building pyramids. One of the main points that I admire about you, Alan, is that you do not let excessive rationality displace passion, and without passionate commitment we get nowhere.
Now, write that platform. First convention in N.O., right?
The minority Green Party has never been the majority party or even the largest party in any EU gov't, but they have influenced policy none-the-less.
I wrote the following ROUGH DRAFT in an hour, more to follow.
Policy Goals
The Freedom (Common Sense, Sustainability) Party supports pro-actively taking common sense actions in ways that sustain a decent level of economic activity and quality of life for Americans.
Any railroad that electrifies its track shall not pay any property taxes on that track and related infrastructure. The US Congress will act under its authority deriving from the Interstate Commerce Clause of the US Constitution. Any local taxing authority that loses more than 2 % of it's property tax revenue shall have the excess above 2% compensated by the US Gov't. Said compensation to be reduced annually to zero over 25 years.
The various states will be authorized to create Electrification Authorities that can issue tax free Municipal Bonds to help pay, via pass through loans or otherwise, for any railroad improvements. The US Gov't will guarantee 90% of the principal but no interest on said municipal bonds.
This support of Railroad Electrification will equalize past support for trucking via the Interstate highways et al.
All gasoline and diesel fuel, over the road and otherwise, will be taxed with a new Conservation tax. Said tax will start 6 months after enactment and will increase by 1.5 cents/gallon each month for a minimum of 20 years, with quarterly inflation adjustments to the existing tax and the 1.5¢ monthly increase. These modest tax increases will allow time for people to adjust and plan for the future. Unfortunately, world oil price increases may dwarf these revenue steps. Corn based ethanol will be taxed at 60% of the rate for other fuels.
Farmers will be entitled to a refund of 85% of these taxes paid.
All fuel taxes not used to support sustainability will be rebated to the people via Social Security and Medicare. 85% of the prior fiscal years tax collections (net of Sustainability expenditures) will be rebated via lower employee tax rates the following calender year. The other 15% will be used to support the fiscal soundness of Social Security and Medicare via investments in US equities. The trustees will be advised to preferentially and responsibly invest in sustainable industries such as wind farms, railroads, biotech and so forth.
This 15% will provide a sound support for the fiscal soundness of Social Security & Medicare as well a source of capital for growing industries.
There will be no more federal funding of highways except for case by case review of car pool lanes and bus rapid transit.
All Urban Rail projects that pass minimum viability standards shall get 90% federal funding. Those that fail these standards will get 75% federal funding.
Congress shall ask the American Society of Civil Engineers for suggestions on streamlining and speeding the design and construction of Urban Rail and trolley buses. They will also ask the FRA to set standards, in consultation with the affected railroads, for electrification of North American railroads. Both reports are requested within 6 months, but sooner if possible.
In addition, the Switzerland Confederation will be respectfully requested to provide technical assistance
Local transit authorities will get 70% federal funding to buy new diesel or other fossil fuel buses and 90% funding for electric trolley buses and their associated infrastructure. They will get a 97% rebate on fuel taxes paid. They will also get a federal subsidy of 3¢ per passenger-mile carried in addition to existing support.
Federally controlled mortgage agencies will establish a sustainability premium to offset risks associated with Peak Oil. This premium with increase by 1/16 of 1% per year. Those areas judged most sustainable will not be assessed this premium, and graduations in these premiums will increase to the maximum.
Brilliant!
Now find somebody to carry the banner.
Everything you recommend is logical, moderate, based on proven technology and virtually certain to work as advertised.
How could any honest and intelligent politician oppose any part of this platform? (Alas, the answer is that the lobbyist/lawyer/fat-cat/special-interest groups would force most sitting legislators to water-down your program to useless thin gruel. THAT is why we need a new party.)
Still there is a difference between first two peaks/plateau and the last one.
You need to plot two other charts on the same page - price of oil and excess capacity.
You will see that previous peaks happened with low price and probably increase of excess capacity.
The last plateau is different - the prices are high and there is almost no reserve capacity. So I think the reason for the plateau is different.