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Based on my analysis of Khebab's HL work, in January I predicted that net oil exports would fall much faster than world oil production falls. Just about every piece of data that I am aware of is pointing toward lower oil exports worldwide.
The recurring question is whether the decline in oil exports is voluntary due to reduced demand or involuntary due to declining production.
I of course believe that the decline in exports is completely or almost completely involuntary and due to declining production.
Just remember that when the Saudis first announced their "voluntary" cut in production back in the spring, they said that they could not find buyers for all of their oil--even their light, sweet oil--when light, sweet was going for $70 plus in the US. Also note that the recent "decline" in oil prices brought us down to about 50% higher than the previous nominal peak.
Furthermore, the Saudis promised to increase production after the hurricanes, and they were unable to deliver, thus my contention that the new "swing" producer is the release of oil and petroleum products from emergency reserves.
I did a little chart a few weeks ago that showed the various combinations of production and oil price that would result in $One million per year in cash flow (after a 20% royalty, but before operating costs). Matt Simmons is predicting $200 oil in 2010, in constant 2005 dollars. If he is right, a 17 bpd oil well will generate about $One milllion per year, before operating costs, or 1.7 bpd = $100,000 per year. The cash flows that would be headed to the producers and exporters would be incredible, which will encourage consumption in the exporting countries, even as their production falls.
If memory serves, each American uses the energy equivalent of about 65 barrels of oil (BOE) per year (from all energy sources). So, a family of four would be 260 BOE per year, at current rates of consumption. For comparison purposes, if this were all priced in "Simmons 2010 oil dollars" a family of four would have to pay about $1,000 per week, to buy 260 barrels of oil per year.
As we know, price is where consumption meets supply. IMO, the new reality is a series of auctions for declining net oil exports, and I think that net export capacity is going to decline at a breathtaking rate.
As I have been saying for some time, implement ELP, i.e., Cut thy spending and get thee to the non-discretionary side of the economy.
Do us newbies a favor an redifine ELP or link to a definition.
I forgot to say please.
Localize--try to reduce the distance between home (in smaller, more energy efficient housing) and work to as close to zero as possible and/or commute to work using mass transit.
Produce--try to become a provider of essential goods and/or services. If nothing else, look into starting a permaculture garden.
Regarding Peak Oil/Peak Exports, either I'm wrong (based on work done by Hubbert/Deffeyes, et al), or Yergin is wrong.
If I am wrong, you will have a lower stress way of life, less debt and more money in the bank.
If Yergin is wrong. . .
Whereas reading TOD forums shows us that "experts" have to complicate things beyond belief in order to be believable.
</sarcasm>
The degree to which experts get involved in discussion is directly proportional to the confusion in the general pop.
Hence, paralysis.
Hence, thank jeebus for the clarity of writers like WT.
[Rethin: HEAR THAT?]
This is great and all but what if your significant other is dead set against any self imposed power-down, and you also have kids? :(
Regards,
Tony
Hand her printouts from the Housing Bubble Blog.
I have also previously described how downscaling your lifestyle gives you a competitive advantage as it becomes more apparent that a lot of industries are facing labor surpluses, i.e., you can volunteer for a wage cut.
I have basically been outlining the survival techniques that I used to keep feeding my family from 1986 to 1989. After the 1986 oil price crash, I took a job in Dallas, with a 50% pay cut. In early 1989, when I hadn't found a lot of oil, and oil prices still weren't too high, I volunteered for a 50% pay cut, with a stipulation that I would receive equity ownership in any oil fields I found. I anticipated that layoffs were coming, and I moved myself from the most expensive employee to the least expensive employee. As I expected, half of the staff was laid off (but not me!). It's kind of cold blooded, but feeding my family comes first. In any case, from early 1986 to 1989, my income dropped by 75%.,
But then in late 1989, I found a field that had peak production of over 1,000 bpd at a depth of 2,000' (tiny by world standards, but pretty impressive for West Central Texas). I finished 1990 with my income five times higher than 1986. Life, as they say, is a roller coaster.
In any case, regarding ELP, I know of what I speak.
Usually when I tell non-oil types and the new hands coming in the oilfield about 1986 they look at me like I'm nuts. I may be, but that is beside the point. The depression that hit the US oil industry was met by the media with cheers at the time. The oil issue was "solved" for all time. Back then I was working on rigs during days on and installing solar systems on days off. Both industries disappeared instantly.
The same day that I was laid off, my wife told me she was pregnant. Fortunately, I had computer skills to parley at the time and went to work for a company that built an essential component for power generators. It didn't take me long to figure that at some point in the future that the gas turbines would finally eat the "bubble" up some day. Gas Turbines were about the only capacity being added.
I remember for a long time thinking I was like a stranger in a strange land, knowing the inevitable was going to happen but found it pointless to try to explain it. Now I still wonder if you are doing someone a favor by explaining Peak Oil to them. Once they have their "oh my god" moment, it is up to them to follow their better judgement. It will suck being right about this.
I circulated a memo in early 2000, to the effect that 2000 was the inflection point for the Three P's: Prospects; Product and Personnel. I predicted that we were going to see strong inflationary pressures in all three sectors.
A friend of mine in Midland, who owns a mud company, said that he hired a guy with a high school degree and trained him as a mud man. After the guy had six months experience, he was hired by another company for $75,000.
That is what happens in this drilling environment with inexperienced people in the field and inexperience people owning the companies. The warm body syndrome. Tell your friend-I feel his pain.
What was even harder to deal with was that it was not just my firm that was heading toward commercial extinction but also all of the other firms in the offshore sector. Having a rolodex full of contacts (how quaint that sounds) was no help at all when all of those contacts were also out of work.
That experience was a shock that I will never outgrow or overcome. Two colleagues took their own lives and I don't know many who rode it out easily. The majority of folks in North America have no understanding at all of the downside of PO or what that experience will truly be like. WT may lay it out but folks will not undertstand it until it hits and then it will be way too late.
No. The Invisible Hand pushed them over the edge.
It's your basic non-survival of the "economically" unfit. Thank you Adam Smith.
Yes, there were suicides, divorces, alcoholism, drug addiction, you name it, after 1986. Now the same thing is happening while things are ball to the walls. The first thing I ask a trainee is "Are you sure you want to be in this business?" The money always wins though.
The most inventive suicide that I heard about back in 1986 was a guy who rented a plane in Lafayette, Louisiana and pointed it due south until he ran out of fuel and crashed into the Gulf.
In my first year of college I met a very nice gentleman with a PhD in Geology. He was working at the university on the weekends for a friend of his who happened to be a former school teacher. He told me he lost his job as an oil geologist in the 80s and remade himself into a high school science teacher. I got to know him over the next year as a good-hearted man intensely dedicated to his students. He was constantly striving to increase his knowledge base by attending countless workshops and seminars for science teachers.
One weekend this normally cheerful guy seemed despondent. When queried, he explained that he had lost his teaching job. With his PhD and teaching experience he was on the highest pay track and the school district wanted to hire someone just out of college to save money.
He couldn't find another position and the last time I saw him he was depressed and emaciated working at a Safeway bakery for $6 an hour, unable to pay his son's tuition and his wife preparing to leave him. It was heart breaking. I will never forget it. It still haunts me and has been one of many life experiences that taught me the sad truth of our society that so many workers are nothing more than a means to an end.
BOP is absolutely correct. Very few people have any real concept of just how far down the economic ladder they can fall and this time the safety net below might completely unravel.
Line of the day!
For a couple of more years I hung on, and times just got skinnier. I ended up working for an asshole junkie theif who proceeded to cheat me out of my override on a 2,000 acre lease block that ended up making 8 pretty good wells. He "oversold" all his interests and the leases are still in a lawsuit. But, he got his comeuppance. Someone threw him off the roof of a hotel and he ended up a parapalegic. Then his house in Sugarland had a mysterious fire and he burned alive in 1999. His wife didn't even have a funeral for him, and if I new where his grave was I'd go drive a stake through his chest and piss on it. But, I'd probably have to stand in line.
Now I'm back in the oil business and he's dead. Isn't life wonderful? The moral is get away from thieves as quickly as possible, if they steal from their investors they'll steal from you. I'd rather pick up cans along a highway than ever work for another cheap theif.
From "Say Anything" - Cameron Crowe
Lloyd Dobler: I got a question. If you guys know so much about women, how come you're here at like the Gas 'n' Sip on a Saturday night completely alone drinking beers, no women anywhere?
Joe: By choice, man.
As vtpeaknik posted to TODE on Saturday, the poorest nations are facing post-peak problems already:
The impact of today's energy crunch on the poor is plain in rich nations such as America: Expensive gasoline and soaring heating bills make a hard life harder. In impoverished countries such as Guinea, where per capita income is just $370 a year and surging gasoline prices have helped spark bloody riots, the energy shock has become a matter of life and death.
Global demand for oil has soared in recent years, pushing international prices to record levels. Despite a recent decline, a barrel of crude still costs about double what it did three years ago.
-SNIP-
While robust economies like America and China are withstanding the shock, the poorest countries aren't. Increasingly they can't afford to slake their citizens' thirst for petroleum -- breeding another form of energy insecurity. The pressure threatens to undermine economies and sow domestic strife, further unsettling shaky regions and presenting fresh worries for policy makers in the West. In addition to Guinea, Nepal, Yemen, Iraq and Indonesia all have been rocked by fuel protests in the past two years.