Also understand that as time goes forward the demands for investment in the oil industry to maintain production only increase. Look at Mexico and Venezuela and now Russia as example where needed investment is not forthcoming. As a country moves from phase 1 to phase 2 pressure to lower investment in the oil industry to continue to support internal projects only increases. Here Venezuela is the poster child.

So its reasonable to expect that as time goes on these countries will not reinvest in their oil infrastructure at anything like the rate investments where made in the western nations at the same time that the amount of needed investment is doubling or tripling in price because of the intrinsic nature of oil in our economy.

We have already seen the costs for investments in oil infrastructure spiral out of control as high oil prices and demand cause more general inflation.

I'd like to see some projections on when a country moves from phase one to phase two.

Finally I think the market will remain fairly clueless about ELM for some time and thus we can expect oil to remain under priced vs the real price needed to prevent exporting countries from going from phase one to phase two with the potential for major cutbacks in investment.

So in my opinion the market by underpricing oil will force most oil producing countries into a phase two situation far sooner than most people realize. I actually think we are already in phase two since we have every indication that all the major oil producing nations are pulling back rapidly on re-investment in the oil industry. At that point ELM becomes a optimistic model probably highly optimistic as producers continue to cut so they can get back into phase one growth.

We have every indication that we have already entered this war between and unrealistic under priced market and producers steadily cutting to get the large profits they need for internal use at phase one growth rates. At this point only a rapid repricing of oil above that needed to get back too phase one along with continued strong demand at the higher price point will spur a reversal of this game of chicken.

See Iran for early Phase 2.

Indonesia, deep into Phase 2 (and importer of oil by quantity, but still a SMALL exporter by value due to high quality oil produced) endured blackouts rather than buy heavy bunker oil while waiting for new coal fired power plants to be completed.

A worthwhile point of discussion is when will the Phase 1 to Phase 2 transition take place.

My guesses:

Mexico within 2 or 3 years.

Venezuela just after the next Presidential election in about 5 years.

Russia within eight years, but more than three years.

Oddly, Norway, with the HIGHEST gas taxes in the world, could be said to be in Phase 2 and never in Phase 1.

I expect 70% or so of Norway's remaining URR to be exported, the highest in the world.

Best Hopes for doing SOMETHING now,

Alan

Westaxas,

I'm wondering what the real shape of the production curve will look like. As countries get past peak production, and especially then they get to Phase Two, it seems like we will be seeing more "above ground" disruption. Thus, at some point production is likely to drop more than normal decline rates would suggest.

It also seems like there will be other changes that make the model more complex. Exports will more likely to go to favored countries - ones that can provide things the country needs, like military protection, medicine, and food. Other non-favored countries may see their imports drop much more rapidly that the model would suggest.