 | Peak Oil Update - June 2007: Production Forecasts and EIA Oil Production Numbers | The Oil Drum | DrumBeat: June 15, 2007 |  |
And now, the latest on peak oil from...Business Week?!
Posted by Prof. Goose on June 15, 2007 - 1:53am
Topic: Supply/Production
Tags: business week, oil, oil prices, peak oil [list all tags]
http://www.businessweek.com/magazine/content/07_26/b4040074.htm?campaign...
By Eugene Linden
From Peak Oil To Dark Age?
Oil output has stalled, and it's not clear the capacity exists to raise production
With global oil production virtually stalled in recent years, controversial predictions that the world is fast approaching maximum petroleum output are looking a bit less controversial. At first blush, those concerned about global warming should be delighted. After all, what better way to prod the move toward carbon-free, climate-friendly alternative energy?
Eugene is a friend of TOD, he's placed a couple of ads here in the past. His site and other writings can be found at http://www.eugenelinden.com/
Kool aid from CERA
OIL PRODUCTION INCREASINGLY CONCENTRATED—AGAIN
The oil market pendulum is swinging back from diversification of supply to more concentrated sourcing. Just 15 countries are expected to account for up to 84 percent of the net growth in global oil production capacity over the next ten years. This is a group of countries that CERA, borrowing from the G8, calls the "O15"—the Oil 15. CERA’s O15 includes, in order of absolute growth in capacity, Russia, Saudi Arabia, Canada, Iraq, Brazil, Kazakhstan, Iran, Kuwait, Algeria, Qatar, Libya, Nigeria, United Arab Emirates, Angola, and Azerbaijan.
Strong growth has already pushed the O15’s share of global production capacity from 51 percent in 2002 to nearly 62 percent in 2007. This shift will become more pronounced after 2010. By 2017 the O15 will represent nearly 66 percent of global production capacity. Implications of this trend are noted below.
*
O15 market perspectives. Recent years have witnessed a rise in explicit and implicit oil price expectations and objectives. Many countries have higher revenue goals because of growing population or development priorities, and all take note that the world economy has been experiencing strong growth with higher prices. Although an expectation for high oil prices—in the $50s and $60s per barrel, for example—does not automatically translate into such an outcome, these expectations do coincide with the shift toward the O15 in terms of growth.
*
Supply risks. Many of the O15 countries face domestic or regional political and security uncertainties. Periodic bouts of political change or insecurity in or around O15 countries create potential for global supply growth to fall short of expectations. Anxiety about the reliability and adequacy of supplies will remain a feature of the oil market.
*
Energy security initiatives. Energy security concerns in major oil importing markets are driven by a number of factors. The growing concentration of production capacity will be one of them. The drive to enhance energy security is a key motivator for increasing investment in oil substitutes, such as biofuels, and greater demand-side efficiency. The combined long-term impact of oil substitutes and improved efficiency could be offsets to this shift on the supply side.
All I can say is that Gomu supposedly had no effect yet I look at the price for oil and it has fairly consistently stayed above 65 a barrel where in the past this was the ceiling it now seems to be the floor price. So not only are the 015 in control but each major event from now on out will probably ratchet the floor price up a 2-5 dollars at a time with and long term drop highly unlikely. Its still a bit early but the concept is that from now on out anything bad happens and the floor price increases but we will not see long term decreases in price. Thus the peak oil treadmill seems to have started in earnest.
This picture may be clearer
Realist: Another quiet milestone- a new record high forecast for long term oil prices (from a "cornucopian" source)- "50s and 60s". It is possible that CERA is not so much agenda driven as simply mediocre at research and forecasting, as their focus is obviously on marketing and promotion (they are the GM or Ford of oil market research/forecasting).
I thought Mr. Yergin said oil was going to $38.
What happened?
The "10-Squared Strategic Investment Plan"
-By Tate Ulsaker
You already know about Peak Oil. You see evidence of the petrocollapse tsunami approaching. The visible storm clouds darken the sky of every system on earth, including the economic, political, social, ecological and even spiritual. You sense that this storm is not just another Great Depression and will include something bigger than the Black Plague and Dark Age combined. Even as the masses are lulled to sleep by their many info-tainment distractions in a paradigm of zombie-like consumerism, you are ready to be different, to risk ridicule and to prepare for the obviously imminent crash events, many of which are unfolding right now. You are assured that affecting change now, pre-crash is a far better strategy than reactionism in the post-crash era when your powers to affect change will be greatly diminished. If this paragraph makes total sense to you, then you are ready for the Ten Squared Strategic Plan.
Question - What does it mean: "10 Squared"?
Short Answer - A 2-phase way to enhance your wealth, social standing and spiritual purpose by 100 times in one generation during petrocollapse.
...
The longer answer is below...
http://arkbuilders.org/index.php?option=com_content&task=view&id=18&Item...
Great thought-provoking article. Doesn't plumb the intricaticies thattwe get so involved in here on TOD of course, but this article should certainly make some people think.
One point that I thought it could have put more emphasis on is - depletion of existing oil wells, oil fields and oil producing countries is a well-established fact and can't sensibly be argued against. This is the reason why the world has to run fast on the treadmill to even stay still. I felt he didn't give much justification for complete laypeople as to why global oil production wasn't a 'steady-state' phenomenon. Which is kinda what people want to believe......
Very good article though!
Cuchulainn
Hello Eugene and fellow TODers,
Kudos to Eugene for getting this published in BizWeek! I left a posting in the BizWeek comments section asking him to next publish an article on Westexas's Exportland Model. The ramifications arising from this model should really get the BusinessWeek readership highly interested! Go WT!
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
There are 2 types of "peakers":
Type #1: those who have a personal political advancement strategy
Type #2: those that are personally prepping
If you're happy about this and the the Indy article, you're primarily a Type #1.
If you're ambivalent or unhappy about these articles, you're primarily a Type #2.
To anybody truly prepping: YOU DON'T WANT THE POPULATION OR THE MARKETS TO RECOGNIZE THIS! We can all kiss our asses and any hopes of better positioning ourselves goodbye once either/both of those things happen.
There will be no "Cuba" style Powerdowns. Cheney or whoever comes next will blast us all back to the stone age before that happens:
http://www.lifeaftertheoilcrash.net/Archives2007/WhitneyPutin.html
Forget your neighborhood being the next Havana, it's going to be Baghdad or New Orleans in short order once the markets "get" this.
So you want to get to a place with lots of water, isolated from invading populations, and away from nuclear targets and fallout patterns as soon as reasonably possible.
These high profile articles are not a "good sign". They're symptoms that things are getting ever closer to completely unraveling. It's like when people on the beach finally spot a Tsunami on the horizon and say "wow, a Tsunami is on the way, maybe we should start running." At that point it's probably too late to start running unless you can haul ass like FloJo.
Hi Chimp:
More one for Matt Savinar I think, not directly related to PO, but you have to laugh (and it is a Friday):
Wheels coming off Globalisation?
Or: When poverty knocks ont’ door, love flies out the window…
Wal-Mart branded anti-US in China row
By Mark Kleinman in Hong Kong
Last Updated: 3:15am BST 15/06/2007
Wal-Mart was plunged into the heart of the row over the US's massive trade deficit with China yesterday as it faced accusations that an influx of cheap Chinese imports had rendered the retailer "un-American".
Wal-Mart said it still sourced from within the US as much as was commercially viable
The allegations from a US pressure group funded by one of the country's biggest trade unions strike at the heart of the debate over globalisation and come as US politicians step up pressure for a draconian series of trade sanctions against the Chinese government.
A television advertising campaign by WakeUpWalMart.com, an organisation funded by the United Food Commercial Workers' Union, cites a memo from Sam Walton, founder of the world's biggest retailer, in which he pledged to keep Wal-Mart American.
"No company has done more than Wal-Mart to strengthen China and weaken America," said Paul Blank, director of WakeUpWalMart.com. "The time has come for every American to demand that Wal-Mart stop making China stronger at the expense of American jobs and America's economy."
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/06/15/cnwalm...
I believe these kinds of predictions are unnecessarily alarmist. During the Great Depression, we were able to turn away from individualism and toward cooperation. No doubt peak oil will be difficult (especially economically) but I believe we'll adapt better than some here expect. For example, there's an interesting article about the difference between men and women: in times of stress men fight and flight, where as women tend and befriend. Perhaps in a peak oil situation women will step up to the plate to lead the charge on tending and befriending. The world will increasingly need this.
Smokey,
As usual, it takes 5 seconds before somebody posts a deeply flawed reference to the GD.
The bad news is that during the Great Depression, which was global, Hitler took over Europe and killed tens of millions people.
The good news is Roosevelt took over here, went to war with Japan and Genermany, and then his successor initiated a regional nuclear holocaust in Asia.
Back then we had 2 nuclear bombs. Today we have 20,000. And unlike back then, the energy wealth pie is now decreasing.
There is now a name for people moving to the valley where I live. They're actually being called "peak-oil refugees."
At least that's what the real estate people call them.
So an exodus appears to be starting ...
Green/Refugees:
Down a bit south of Raleigh, NC..just past the city limits there are new plats that are going to be developed and the houses will be termed "GREEN".
They will be VERY expensive. This is the new mantra and scheme for the developers I suppose..ones who are very likely reading TOD and plotting a new way to make money off PO and CC.
Expensive is like maybe close to a million whereas current prices in the neighborhood are ranging from $250,000 to $500,00.
This is where my son just brought and where I have visited several times. The land in question was previously NOT going to be developed and it lent a huge amount of privacy in a very nice, not too overly developed area but now the money hounds are at it tooth and nail.
I bet it will be gated as well. There goes the neighborhood.
Airdale
PS. Might be interesting to google ,development and green.
Bet this will go over big time and I note that there is NO housing bubble bursting in this area of NC. There was in 85 when I moved away and had to let the relocation firm take over my North Raleigh(Wake County) residence. There are some areas of this location that are in a declining market but only slightly so based on demographics(meaning poor white trash or ethnically undesirable to put it nicely).
Chimp, your arguments are meaningless. Because conditions are different today than they were in 1930, total collapse is the only possible outcome? Neither you, nor I, nor anyone else can predict how this will all shake out.
The seeds of positive change may have already been planted... from Empire to Earth Community, as the book says. With the three big threats of peak oil, climate change, and economic meltdown we may be able to find a better way, we can do so much better. Not that there won't be hardship and strife along the way.
I find the obsession with insisting that there is "no option but total collapse" a bit ridiculous. There are many possible outcomes.
Yes things are different, they potentially are much worse. Declining energy supplies on the horizon. Religious fundamentalists - Moslem and Christian. An empire that is overstretched with a declining manufacturing and energy base Other countries waiting in the wings to become empires. The whole history of humans is written in blood and conflict and I see no reason presently this will change. We at the Oildrum may be educated (reference to the poll) and civilized, but given a large portion of the world’s populace that believes in a man up in the sky that watches over us I don’t put much faith in them ever being reached by reasonable arguments. Yes there are a number of potential outcomes, but I’ll put my money what I feel is the most likely one given human history. A very short history at that, only a few thousand years of civilization. Not a long track record to go on. I can’t prove it, it’s a hunch, a word that is held with contempt on this site, but I literally bet the farm on it.
I agree... the only difference is that things are much worse.
We are more extended on paper meaningless dollars. In 1929 at least the dollars were tied to gold.
And population numbers? Ha.
And what about ability to work the land? Double - ha.
And how about social fabric? Can we say "tinder box"? Ready to explode, all of it.
It feels better to think "nobody knows" but we all know that this will end up far, far, far worse than any 1929 or any black plague or any dark age. We are way over the line here.
Oh God you drank the Korten Kool-Aid. This is a guy who - I kid you not - described the Baby Boomers as the generation of "wise elders."
Seeds of positive change? LMAO! Dude, we're spending $1.2 trillion (on the books) and lord knows how much off the books in military spending. Another 1.8 trillion or so on oil. Who knows how much on advertising. I could go on. . . In contrast there are at best a few billion being spent on anything positive. Trillions for catastrophe, billions for positive change and the gap is only worsening with each passing year. Where does this lead us?
Conditions are far worse than in 1930. The energy pie was getting bigger back then. It is now shrinking. And it is shrinking in the context of a world spending at least $1.2 trillion a year developing and deploying highly advanced killing technologies.
History and the bible can be twisted to support any belief system. Never mind that through the depression and up until Pearl Harbor was bombed the peace movement was one of the most powerful political movements in the country. Have you ever talked to those who survived due to the CCC or WPA? I've heard lots of their stories, they are proud of the country, what they did and how they survived, and never went for anarchy. My parents, inlaws and all their friends lived through the great depression and wouldn't recognize what you are talking about. The suffering, yes, but the attitudes and outlooks, no.
During the depression the 4th world wasn't living 3 feet off your door step.
Indeed, Matt. The last thing I want is the sheeple waking up before I own a petrocollapse ready farmlet. Or for that matter bidding up the price of silver before I have finished gathering my hoard.
Yep, I don't need to explain to you how it is.
Case in point: prices are dropping on some farmlet-potential spots I looked at last week. If people understood what is going on, that trend would reverse and whatever little hope I have of getting one of my own would be dashed.
Hi Chimp--
I have to respectfully disagree. I am definitely a 'Type 2" personal preparer, but I welcome anything that will motivate others to learn about peak and prepare. We won't get through this by by being survivalists; we will need community, however small and local. So to the extent the message delivery can be expanded and get more people in each community thinking correctly, the better off even we Type 2's will be. Articles like this help.
Vtfarmer,
I agree with you 100%.
Matt has committed the fallacy of the false dilemma, as well as the fallacy of questionable premises:
1. One can have a political agenda as well as making personal preparations.
2. Even more important, the future is not a zero-sum game; it is not like poker, where you want to guard information, because information is power. Savinar's premise is that the more people who are "in the know" the harder it will be for individuals to make preparations is flat out false if you see (as you do) the fundamental question of survival as how to create viable communities.
Heck, from the dense Cornucopians on this web site, you can see that the entire MSM could be shouting end of the world, and the sheep would look up and say "oh, my, but that, of course, is not possible.", then go back to grazing. You might get a made for TV movie. But then they will go back to being more interested in Paris Hilton.
Don, any community that has a chance to survive in a post peak situation will probably not have it’s chances increased with a knowledge of peak oil. In fact, a strong argument could be made that articles in the media will decrease their chances as people flock to these places in an effort to survive. I’ve seen lots of nice small towns in Northern Illinois destroyed by yuppie types flocking to them to experience the small town lifestyle and in the process destroy these places. These same people will be the ones swamping small rural communities looking for a place to survive, bringing nothing other than their bank accounts and wasteful lifestyles - which in a crash will be meaningless compared to survival skills. If you live in very large urban areas such as Chicago, New York, Los Angeles, etc., kiss your ass goodbye because no amount of preparation and knowledge is going to make these places survivable. The logistics are too insurmountable. There is just too much antiquated infrastructure and structure to replace.
Clearly, to build a community likely to survive Peak Oil we need at least some people (those in the community) to be aware of peak oil. I do not see how awareness by many affects the chances of survival of those who take extensive preparations to build community. For example. suppose in the late sixties there was even more awareness of the danger of urban riots than was actually the case. Would this increased awareness have hurt the chances of ANYBODY to survive urban riots. I doubt it. Rather, I think increased awareness allows and encourages increased preparation on many levels.
Three cheers for spreading the word!
No you don't. I just visisted a families off-grid farm. They're totally off the grid, have lots of animals, etc. They did it even though they had never heard of PO.
The Mormons are probably the only community even remotely prepped. And PO awareness in their community is as low if not lower than it is anywhere else.
The rest of your post is deeply flawed in its thinking. The last global oil war ended with most of the civilized world in ruins, one continent having experienced a nuclear holocaust. If you examine the arc of current events, the current global oil war is heading in a similar direction. We're not talking about something as relatively benign as urban riots here.
We'll see urban riots long before we see revolution or collapse. Check any history book.
The future will be like the past, but with variations.
BTW, how long did it take the Roman Empire to collapse?
And when did the big Roman riots take place?
It took Rome 400 years to collapse. But as we are way more leveraged then they ever were I suspect it will take us about 50-to-100.
That's the good news. The bad news is the American Empire collapse began in 1971 when our oil production peaked. So were 1/3-to-2/3 of the way into it, the part when things start to get real nasty.
Matt,
My own prophecy for when THSHTF is the year 2020.
What is yours?
If anybody is interested, I'll explain how I came up with 2020, which is only thirteen years from now.
Personally, I began preparing in 1956, with a Global C-2 pilot's survival kit, a Mossberg .22 rifle, and a Zundapp motorcycle. But for the last decades I've focused mainly on my extended family and other sources of community.
Don,
The shit is hitting the fan one city/region/economy sector at a time. I think it will continue to do this. The thing is we are a self-selected group here. If you have the free time and energy to post here you are, by default, not in an area where TSHTF. (Some rare exceptions, of course.)
Examples:
Compare Baghdad, Detroit, and New Orleans as they were in 1957 at the height of the industrial age to as they are in 2007 as the industrial age is just in the intial throws of collapse.
Los Angeles, Mexico City, Tehran seem to be good candidates for where TSHTF next.
I agree with you 100% about the importance of location.
The cities will burn when the looters shoot the fire fighters.
Martial law will help for a while.
My guestimate of 2020 is about nationwide realization that THSHTF. For example, Dow Jones Industrial average below 1,000, interest rates above 30%, reneging on Medicare and Social Security through prolonged double digit inflation, housing starts below 100,000, more people killed in riots than by auto accidents (a milestone to look for), rampant black markets, increasing gang or warlord rule in urban areas, enslavement of illegal alients to mine shale with pick and shovel, etc., etc. But none of this is Collapse.
I think TEOTWAWKI will come gradually and somewhat later than the year 2020, if it comes at all.
There is a small but finite possibility that new technology can pull our chestnuts out of the fire for a few more decades, especially if we forget about global warming and burn that coal as fast as we can mine and transport it.
The possibility that our political leaders at the national level will do anything constructive to deal with Peak Oil and greenhouse gases is slim to none--unless, say there is a military coup and one of my daughters takes over as emperor.
How is your polygamous cult coming along? Have you found the Holy Books yet?
I'm kinda partial to December 21, 2012 since that is when the Mayan calendar ends.
I concur - precession to Galatic Center 2012.
From the NewScientist:
"Mammalian species are known to last an average of 2.5 million years before being snuffed out, but nobody had been able to figure out why. The reason, it turns out, may be linked to regular wobbles in Earth's orbit.
Jan van Dam from Utrecht University in the Netherlands and colleagues reached this conclusion after studying the fossil record of rodents from central Spain over a 22-million-year span. This showed a link between rodent extinction events and the climate record."
BTW: despite what is prophesized to transpire 12/12/12, the Mayan calendar doesn't really end per se for time and life were considered to be forever cyclical.
Shall we start a betting pool?
I think 2012 is too early for TSTHTF, because by then we will still probably be able to import maybe 80% or 90% of the oil we do now. A drop of ten or twenty percent in oil imports (together with slow decline from domestic fields) is not, IMHO, enough to put the fecal matter into the turbines.
True, but an attack on Iran or Siberia to try to get control of energy supplies might get us to TSTHTF pretty damn fast.
I worry about our leaders ...
A drop of 10% in our oil imports almost certainly means there will be some empty shelves at your local supermarket. Almost certainly there would be lines at gas stations. Almost certainly the segments of our economy that are sensitive to transportation costs and fuel availability and don't receive public subsidies would be affected. That's trucking, for one. When log trucks don't roll, mills shut down. When steel trucks don't roll, factories shut down, and major construction schedules are thrown off. That would be known as unemployment, something this country hasn't had a serious dose of since the '30's. Combine the demoralizing effects of empty shelves and parking lots with boarded storefronts and unemployment, and I think you would have to concede that, indeed, TSHHTF. I don't think we could absorb a 10% fall in imports without it triggering those effects, I assume you think we're not that vulnerable. I would propose that an economic contraction of that magnitude on a population as 'unprepared' as we are will profoundly unsettling and the clinical term 'depression' will be applicable not only at the macro level, but at the individual level as well, and most people will manifest not sociopathic symptoms but symptoms of depression- lassitude, disattachment, denial, avoidance. History is full of examples of famines that were not attended by violent uprising and civil disorder. I guess my vision of the future is even darker than yours, in a way, I just think that most Americans are so weak and stupid that they won't even lift a finger to try to save themselves until the last twinkie is gone. So you guys are safe in your rural redoubts, all the potential hoodlums will be holed up trying to sell their looted bling on ebay.
My calendar appears to end on December 31. 2007?
I don't think you and Don are as far apart as you think, Matt. LA could down the tubes next year but much of the country might still hold together while the feds try to restore order (or watch the city simply eventually burn).
My preparations are aimed at roughly similar levels to you and Don. In some ways I'm pretty far along and in others not nearly as far as I want but I think I am a bit more optimistic than either of you.
I still believe that the technical problems around peak oil can be solved by a combination of factors such as Alan Drake's light rail, an expansion of nuclear power, and rearranging our way of life so that we can retain a viable technological civilization. M. King Hubbert thought so too but he also warned that if we do not get off the "folklore" monetary system which directly conflicts with real science then there is no hope at all.
My pessimism comes from the realization that this is not a technological problem as much as it is a religious problem. Economics and the myth of infinite growth are the religion of modern civilization. To face that myth and replace it with something, anything, grounded in real science is something that we will almost certainly refuse to do.
Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett
I suspect that the coming collapse will have little in common with the collapse of the Roman Empire. No previous civilization has become become so utterly dependent on fossil energy. The nearest parallel might be some the the early Mesopotomian empires which destroyed themselves by destroying their supporting ecology.
BTW. The collapse of the Western Empire really started in 378 after the battle of Adrionoble in 378 AD and ended when