Yergin: ...We created this thing that's called the IHS/CERA upstream capital cost index, and the newest one shows that costs continue to go up dramatically. Basically, since 2000, costs have doubled and most of that doubling has been in the past three years....
OMG, imagine, as the cost of Oil goes up, EVERY OTHER cost goes UP.
WHO the HECK would have predicted that? I guess not a million dollar prediction outfit like CERA. All thoses models, indexes and they didn't see it comming.
I guess we TOD people must have a crystal ball to for us to have seen it.
As I have previously noted, the "Yergin Indicator" suggests that oil prices will trade at about twice Yergin's predicted index price within one to two years of his prediction.
thanks for this chart Leanan, always interesting with this Yergin bloke!
In summarizing all the errors presented here by Yergin ( -6.16 $ -10 $ -35 $ -17 $ -40 $) ending at -108.16 $/barrel
=> The Yergin algorithms has over the span of ONLY 6 years, promissed You a FREE barrel today, pluss 8.16$ in your hand as a pickup-fee , sort of ... Where is your nearest pickup-depot, Isn't it next to the pepetual-machine factory?
While agree with you guys that Yergin made some foolish predictions, you guys should at least be fair and recognize that TOD patron saint JHK is an equally awful procrastinator:
Only drink the good stuff. Today on Zorba Paster's “On Your Health” show on NPR he affirmed that premium vodka has less chance of giving you a hangover because of less esters. I prefer Chopin vodka because I am slightly intolerant of gluten - it's made from potatoes.
Ooooooo! That looks mighty good. I'll have to find a place to order some online. I'm in the outback and it is unlikely I could fins some in a reasonable driving distance. Possibly the only thing I miss about Chicago apart from the food is that I can get anything (Sam's liquors would definitely have it).
Well it seems Yergin is on a learning curve since his $85 statement. He never mentions future price, or makes derogatory statements about PO. He wants to be able to tell people in the future what he knew that he doesn’t now know.
Yergin is the chairman and a co-founder of Cambridge Energy Research Associates, arguably the world's leading energy consultancy.......
".......The other thing that it's telling us, that I think is important that gets overlooked, is how rapidly costs have gone up in oil-and-gas development. That's maybe the great overlooked factor here, because the public and politicians focus of course on the price, but what the industry deals with is the reality of these costs that have gone up so dramatically. In a way, $100 oil tells a pretty dramatic story of how much things have changed in just three or four years."
Isn't part of the definition of "Peak Oil" the recognition that it will cost more and more to get the same amount of energy? It appears that the chief rat is now departing the ship
I'm with the Mogambo Guru -- "We're freakin' doomed"
The thing that gets me about the Yerginite Community is their certainty--and I realize that this is a case of the pot calling the kettle black, but I have frequently pointed out that if you implement ELP, and try to live on half of your income, with a minimal commute, or walk and/or take mass transit and invest in productive enterprises (or work toward becoming a producer of essential goods and services) and if I am wrong about Peak Exports in 2005, what is the downside? You have little or no debt with a healthier lifestyle?
So, if you are a member of the Yerginite Community, and you maintained your long distance SUV commute to and from your suburban McMortgage, and the Yeginites continue to be wrong, what is the downside?
This is what gets me. The Yerginites by and large don't even offer any suggestions that people might want to downsize--if the Yerginites turn out to be wrong about no real production decline before about 2050 or so.
I'm afraid that somewhere along the line between implementing your ELP and living a healthier life with no debt would be the collapse of the worlwide economy, war, societal collapse, then a re-ordering of society-- THEN the living healthier debt free bit!! (if you are still alive)!
or better economists? there is an age old four letter word for this:开源节流
开: open (up), discover
源: source, resource
节: limit, reduce
流: (out) flow, expenditure
According to economists, the Great Depression was caused by "excess saving."
See, if our grandparents had been total whores and just kept spending like crazy while their wages were cut, everything would have turned out okay. For the last 80 years, economists have worked hand-in-hand with Madison Avenue, Wall Street and Washington DC to produce a new American, one who would not respond to the exposure of massive financial fraud by panic saving.
And now we are the product. The whore with no gag reflex. Now it's time to maintain our confidence so as to fool Chinese banks into buying our bad debts and rip off their ordinary citizens. Hey handsome, me give high-return boom boom all night long!
It may be a guaranteed 'Revolution', but this revolution's form is impossible to predict.. of course, I don't think that form will be homogenous, either. Might look very different in different regions/cultures/climates..
So, therefore, we continue on with business as usual until we collapse anyway due to oil depletion, resource depletion, and the effects of global warming. We cannot continue as we are and we cannot stop. A nobel prize to anyone who can figure how to get us out of this conundrum.
American society will collapse one way or other; therefore, it would be prudent to figure out a way to make this transition in a way that would minimize pain, suffering, starvation, disease, and so forth.
The politicians promise us what they think is a third way. We use investment in alternative energy and efficiency as a way to invest our way into the future with lots of jobs in cleantech without any sacrifice whatsoever. Well,it is a questionable approach but it seems to be the only thing on the horizon that has a chance in hell of being implemented. Think of it as an experiment. But where will they get the money to put where their mouth is. Start by getting the hell out of Iraq and cutting our military expenditures in at least half.
As individuals who are bound and determined to continue to consume regardless, we can start by investing in our money in both capital and consumer goods which either contrubute to a more efficient use of resources or minimize their impact on the environment.
Since the vast majority of our economists can only relate to a world where all problems are solved by growth, we have a dearth of information as to how we can carry on a happy and productive life without trashing the environment on which we depend. We ignore the possibility that the pie may be shrinking despite our efforts to continue indefinite growth. The music will stop. The challenge will be to have a just and bearable society when that occurs. We will have to stop by sharing, a concept that in America will be derided as rank socialism.
I make exactly this point with others who side with forever growth approach. They see ANY limitation on growth, particularly a choice to not participate in the growth of consumerism, for which the growth and consumerism reign supreme as a "threat."
I recently pointed out to one advocate of "unlimited fossil fuels" who wishes to claim that we don't know how much fossil fuel is available that even if that is true, we can put some limit on "unlimited fossil fuels" for the planet Earth. If the solid part of the planet was nothing but fossil fuels, we know that it could be no more than a slightly oblate speroid of approximately 7900 miles in diameter. We know the mass (Newton, Einstein) but would have to ignore a number of issues associated with gravitational effects. Yet, no one actually thinks the the planet is nothing but fossil fuels.
But this aside, knowing how much mass must be fossil fuels, with unrestrained growth (no peak resource constraints which they also don't believe in the manner of Julian Simon) you consume the entire amss of the Earth in less than 800 years (at 2.6% growth). For this I am seen, by this group of people, as a "doom and gloomer." Yet these are mathematical consequences and being informed, these people are making the "informed choice" to run headlong into destruction.
So, what is the downside? They won't make more money because of mindless growth and consumerism. To them, that is a very serious downside because without that their skill sets would put them back into the fields as farm laborers.
The challenge remains that the MSM embraces CERA and the "Yerginites" with such vigor. Ed Wallace, on a major Dallas radio station yesterday, was quoting the revised CERA study that all's well that will end well and we don't have to worry about PO until at least 2035! This guy is a well thought of "Car" guy in the Dallas area and is frequently quoted in the Dallas press. I am sure I heard a big sigh of relief echoing from North Dallas and Plano area as he reassured everyone to keep on motoring and that life as "they" know it will never end. John
Note that we have all three ingredients of the Iron Triangle:
(1) Yergin says no real oil production decline until about 2050;
(2) Ed Wallace reports it;
(3) His program is pretty much 100% supported by auto related advertisers.
I don't think that it is a conspiracy per se, but I think that the various parties acting in what they perceive to their best interests continue to convey the message that high energy (and therefore high food) prices are temporary and that, in effect, it is a good idea to continue driving your SUV to and from your suburban mortgage. But of course Ed is just telling probably 95% of the listeners what they want to hear anyway, and what they hope is true. Note that Ed believes that we should vastly expand our road network.
As I said yesterday, if the Yerginites won't listen to the warnings, at some point perhaps we should just view this as an opportunity to dump energy intensive assets like SUV's and suburban McMansions into the hands of the willing buyers in the Yerginite community.
WT writes: "So, if you are a member of the Yerginite Community, and you maintained your long distance SUV commute to and from your suburban McMortgage, and the Yeginites continue to be wrong, what is the downside?"
Westexas: This is an observation and it borders on being content free. You appear to be risk aversive and speak to a risk aversive community. Yergin on the other hand appears to be risk accepting and speaks to a risk accepting community. Or at least speaks to a community with more experience in gaging and coping with risk than the readers of TOD.
So the key appears to be how well can one gage and cope with risk. That's not me by the way. I'm risk aversive too.
But I can see how large differences in estimating risk could evolve from differences in the learned skills of coping with risk. And I can see how Yerginites and their community could gage risk wrong and still have the ability to make money.
Ammond, take it from someone who does nothing but assess risk all day everyday, and who has done it very successfully for decades now. Yergin's game has nothing whatsoever to do with embracing risk or any kind of professional risk assessment. He's either an idiot working for idiots, or he's putting on a deliberate con for the benefit of those who pay him.
I'm with the Mogambo Guru -- "We're freakin' doomed"
I'm also a regular reader. As a gold bug, I particularly enjoyed this quote by the Mogambu Guru:
Now, for those who ponder the timeless riddle of why all of the people in history always rushed to gold in economic turmoil, and who turn in desperation to the Loudmouth Mogambo Know-It-All (LMKIA) to ask me why they do it, I tell you: "I don't know. They just do. Go away!"
I really enjoy TMG -- probably for the same reason I enjoy Kunstler. There is an almost erotic, forbidden, masochistic pleasure in watching the upwelling and swirling of the miasma of schadenfreude. It is so hard to stop oneself from saying "I told you so...."
But what I don't quite get is the part about gold. What, exactly is it good for except dental fillings and electronic contacts? You can't eat the stuff, and whole civilizations have come and gone without any knowledge of, or at least any use of gold. What makes someone a gold bug, and why do we seem to believe that wealth is calculable in terms of gold?
I have applied for membership to the Junior Mugambo Rangers (JMRs) and may soon be accepted. If accepted I will receive a JMR secret decoder ring, an ID Pass allowing me access to the Mugambo Atomic Bomb Proof Bunker (MABPB) and a booklet that explains why when tshtf that people rush to buy gold. I will update the status of my application as I receive further info... :)
Good question, Never - and one I subconsciously asked myself many times - until I bought some.
Just try getting about 10 1-oz pure gold coins in your hand, and then chink them around and listen to the sound, simultaneously watching the rich yellow colour glint enticingly in your hand. Now look in the mirror, you will notice that you have a stupid grin plastered right across your face. You'll also feel like Auric Goldfinger himself - like you'd sell your mother for more of the stuff.
There is something viscerally wonderful about gold - it just IS intoxicatingly, insanely wonderful. I can't give you a better explanation, but I don't think it's about to lose its appeal.
What, exactly is it good for except dental fillings and electronic contacts?
Gold has always been valuable to every culture that had access to it. The Inca made jewelry and ornaments of gold and valued it highly though they had no contact with other cultures that valued gold. For this reason gold could, and can in the future, be used as a medium of exchange or money. Gold has value because it is has great malleability and never rusts or tarnishes. It can be made into jewelry or even golden religious icons.
Being able to have a medium of exchange greatly enhances the trading ability of any culture. Gold has always been used as a medium of exchange and it likely always will be. Therefore it will always be cherished and hold great value to those who possess it.
Yergin: ...We created this thing that's called the IHS/CERA upstream capital cost index, and the newest one shows that costs continue to go up dramatically. Basically, since 2000, costs have doubled and most of that doubling has been in the past three years....
OMG, imagine, as the cost of Oil goes up, EVERY OTHER cost goes UP.
WHO the HECK would have predicted that? I guess not a million dollar prediction outfit like CERA. All thoses models, indexes and they didn't see it comming.
I guess we TOD people must have a crystal ball to for us to have seen it.
Some Yergin Oil Price Predictions:
11/04 (Forbes): $38 in 2005
6/07 (CNBC): $60 in 2008
1/08 (Barron's): $85 in 2008
As I have previously noted, the "Yergin Indicator" suggests that oil prices will trade at about twice Yergin's predicted index price within one to two years of his prediction.
Courtesy of Seismobob:
thanks for this chart Leanan, always interesting with this Yergin bloke!
In summarizing all the errors presented here by Yergin ( -6.16 $ -10 $ -35 $ -17 $ -40 $) ending at -108.16 $/barrel
=> The Yergin algorithms has over the span of ONLY 6 years, promissed You a FREE barrel today, pluss 8.16$ in your hand as a pickup-fee , sort of ... Where is your nearest pickup-depot, Isn't it next to the pepetual-machine factory?
Any TODers able to animate Yergin like this Kent Hovind vid?
http://www.youtube.com/watch?v=LfYENNup27k
I could probably manage the animation, but it's the song that really makes that vid.
While agree with you guys that Yergin made some foolish predictions, you guys should at least be fair and recognize that TOD patron saint JHK is an equally awful procrastinator:
http://peakoildebunked.blogspot.com/2007/12/325-jim-kunstler-worlds-shit...
FYI, the stock market is still at 3 kunstlers :P
On the other hand, Kunstler has admitted that he was wrong and has seemed to have learned his lesson.
Luckily for our future amusement, there is no indication that Yergin has learned his. I look forward to his upcoming forecasts!
Procrastinator? Er, did you mean prognosticator?
ha, indeed, this hangover is not treating me well today. No more cheap vodka for this guy!
Only drink the good stuff. Today on Zorba Paster's “On Your Health” show on NPR he affirmed that premium vodka has less chance of giving you a hangover because of less esters. I prefer Chopin vodka because I am slightly intolerant of gluten - it's made from potatoes.
Try THIS.
Good stuff.
Ooooooo! That looks mighty good. I'll have to find a place to order some online. I'm in the outback and it is unlikely I could fins some in a reasonable driving distance. Possibly the only thing I miss about Chicago apart from the food is that I can get anything (Sam's liquors would definitely have it).
Depends where you are, might not be inexpensive but these fellows can help you.
They are owned by AJ's and they always have it.
You can always tell the SO or write it off as ethanol research. And maybe even score green points.
Well it seems Yergin is on a learning curve since his $85 statement. He never mentions future price, or makes derogatory statements about PO. He wants to be able to tell people in the future what he knew that he doesn’t now know.
".......The other thing that it's telling us, that I think is important that gets overlooked, is how rapidly costs have gone up in oil-and-gas development. That's maybe the great overlooked factor here, because the public and politicians focus of course on the price, but what the industry deals with is the reality of these costs that have gone up so dramatically. In a way, $100 oil tells a pretty dramatic story of how much things have changed in just three or four years."
Isn't part of the definition of "Peak Oil" the recognition that it will cost more and more to get the same amount of energy? It appears that the chief rat is now departing the ship
I'm with the Mogambo Guru -- "We're freakin' doomed"
Yes, that was my thought.
I really wonder if Yergin believes half the things he says. Has he not thought it out, or is he just saying what his clients want to hear?
Either that or he has finally started reading TOD.
Seriously though, confidence and historic reputation take a long time to decay, as evidenced by the past 7 years...
The thing that gets me about the Yerginite Community is their certainty--and I realize that this is a case of the pot calling the kettle black, but I have frequently pointed out that if you implement ELP, and try to live on half of your income, with a minimal commute, or walk and/or take mass transit and invest in productive enterprises (or work toward becoming a producer of essential goods and services) and if I am wrong about Peak Exports in 2005, what is the downside? You have little or no debt with a healthier lifestyle?
So, if you are a member of the Yerginite Community, and you maintained your long distance SUV commute to and from your suburban McMortgage, and the Yeginites continue to be wrong, what is the downside?
This is what gets me. The Yerginites by and large don't even offer any suggestions that people might want to downsize--if the Yerginites turn out to be wrong about no real production decline before about 2050 or so.
I'm afraid that somewhere along the line between implementing your ELP and living a healthier life with no debt would be the collapse of the worlwide economy, war, societal collapse, then a re-ordering of society-- THEN the living healthier debt free bit!! (if you are still alive)!
Marco.
Exactly. downsizing is great for the individual. For American society, it will be guaranteed collapse.
The savings rate in China is about 42%.
the chinese are better capitalists than 'merkuns
or better economists? there is an age old four letter word for this:开源节流
开: open (up), discover
源: source, resource
节: limit, reduce
流: (out) flow, expenditure
They've been at it for longer than we have.
According to economists, the Great Depression was caused by "excess saving."
See, if our grandparents had been total whores and just kept spending like crazy while their wages were cut, everything would have turned out okay. For the last 80 years, economists have worked hand-in-hand with Madison Avenue, Wall Street and Washington DC to produce a new American, one who would not respond to the exposure of massive financial fraud by panic saving.
And now we are the product. The whore with no gag reflex. Now it's time to maintain our confidence so as to fool Chinese banks into buying our bad debts and rip off their ordinary citizens. Hey handsome, me give high-return boom boom all night long!
Foolish workers.
Downsizing is Un-American and i've been told that more than once in just so many words.
I don't buy that guarantee..
It may be a guaranteed 'Revolution', but this revolution's form is impossible to predict.. of course, I don't think that form will be homogenous, either. Might look very different in different regions/cultures/climates..
So, therefore, we continue on with business as usual until we collapse anyway due to oil depletion, resource depletion, and the effects of global warming. We cannot continue as we are and we cannot stop. A nobel prize to anyone who can figure how to get us out of this conundrum.
American society will collapse one way or other; therefore, it would be prudent to figure out a way to make this transition in a way that would minimize pain, suffering, starvation, disease, and so forth.
The politicians promise us what they think is a third way. We use investment in alternative energy and efficiency as a way to invest our way into the future with lots of jobs in cleantech without any sacrifice whatsoever. Well,it is a questionable approach but it seems to be the only thing on the horizon that has a chance in hell of being implemented. Think of it as an experiment. But where will they get the money to put where their mouth is. Start by getting the hell out of Iraq and cutting our military expenditures in at least half.
As individuals who are bound and determined to continue to consume regardless, we can start by investing in our money in both capital and consumer goods which either contrubute to a more efficient use of resources or minimize their impact on the environment.
Since the vast majority of our economists can only relate to a world where all problems are solved by growth, we have a dearth of information as to how we can carry on a happy and productive life without trashing the environment on which we depend. We ignore the possibility that the pie may be shrinking despite our efforts to continue indefinite growth. The music will stop. The challenge will be to have a just and bearable society when that occurs. We will have to stop by sharing, a concept that in America will be derided as rank socialism.
Sharing in a growing population with limited resources means less per person each year. How far does the sharing then go?
I make exactly this point with others who side with forever growth approach. They see ANY limitation on growth, particularly a choice to not participate in the growth of consumerism, for which the growth and consumerism reign supreme as a "threat."
I recently pointed out to one advocate of "unlimited fossil fuels" who wishes to claim that we don't know how much fossil fuel is available that even if that is true, we can put some limit on "unlimited fossil fuels" for the planet Earth. If the solid part of the planet was nothing but fossil fuels, we know that it could be no more than a slightly oblate speroid of approximately 7900 miles in diameter. We know the mass (Newton, Einstein) but would have to ignore a number of issues associated with gravitational effects. Yet, no one actually thinks the the planet is nothing but fossil fuels.
But this aside, knowing how much mass must be fossil fuels, with unrestrained growth (no peak resource constraints which they also don't believe in the manner of Julian Simon) you consume the entire amss of the Earth in less than 800 years (at 2.6% growth). For this I am seen, by this group of people, as a "doom and gloomer." Yet these are mathematical consequences and being informed, these people are making the "informed choice" to run headlong into destruction.
So, what is the downside? They won't make more money because of mindless growth and consumerism. To them, that is a very serious downside because without that their skill sets would put them back into the fields as farm laborers.
The challenge remains that the MSM embraces CERA and the "Yerginites" with such vigor. Ed Wallace, on a major Dallas radio station yesterday, was quoting the revised CERA study that all's well that will end well and we don't have to worry about PO until at least 2035! This guy is a well thought of "Car" guy in the Dallas area and is frequently quoted in the Dallas press. I am sure I heard a big sigh of relief echoing from North Dallas and Plano area as he reassured everyone to keep on motoring and that life as "they" know it will never end. John
Otherwise known as "Cornucopian Radio."
Note that we have all three ingredients of the Iron Triangle:
(1) Yergin says no real oil production decline until about 2050;
(2) Ed Wallace reports it;
(3) His program is pretty much 100% supported by auto related advertisers.
I don't think that it is a conspiracy per se, but I think that the various parties acting in what they perceive to their best interests continue to convey the message that high energy (and therefore high food) prices are temporary and that, in effect, it is a good idea to continue driving your SUV to and from your suburban mortgage. But of course Ed is just telling probably 95% of the listeners what they want to hear anyway, and what they hope is true. Note that Ed believes that we should vastly expand our road network.
As I said yesterday, if the Yerginites won't listen to the warnings, at some point perhaps we should just view this as an opportunity to dump energy intensive assets like SUV's and suburban McMansions into the hands of the willing buyers in the Yerginite community.
WT writes: "So, if you are a member of the Yerginite Community, and you maintained your long distance SUV commute to and from your suburban McMortgage, and the Yeginites continue to be wrong, what is the downside?"
Westexas: This is an observation and it borders on being content free. You appear to be risk aversive and speak to a risk aversive community. Yergin on the other hand appears to be risk accepting and speaks to a risk accepting community. Or at least speaks to a community with more experience in gaging and coping with risk than the readers of TOD.
So the key appears to be how well can one gage and cope with risk. That's not me by the way. I'm risk aversive too.
But I can see how large differences in estimating risk could evolve from differences in the learned skills of coping with risk. And I can see how Yerginites and their community could gage risk wrong and still have the ability to make money.
Amm: Classic. Danny's idiotic statements repeated ad nauseum make him more of a "real man". No wonder Chimpy was elected twice.
Ammond, take it from someone who does nothing but assess risk all day everyday, and who has done it very successfully for decades now. Yergin's game has nothing whatsoever to do with embracing risk or any kind of professional risk assessment. He's either an idiot working for idiots, or he's putting on a deliberate con for the benefit of those who pay him.
is he just saying what his clients want to hear
Unlike SO many of the things mentioned here - this is a testable theory.
All one need is money to pay Yergin, place him where he can pick up on 'peak oil belief' clues, then see what he pitches.
He has the money
We have the clues
Who is going to put them together?
This theory is falsifiable only in principle, at least under the present regime.
I'm also a regular reader. As a gold bug, I particularly enjoyed this quote by the Mogambu Guru:
I really enjoy TMG -- probably for the same reason I enjoy Kunstler. There is an almost erotic, forbidden, masochistic pleasure in watching the upwelling and swirling of the miasma of schadenfreude. It is so hard to stop oneself from saying "I told you so...."
But what I don't quite get is the part about gold. What, exactly is it good for except dental fillings and electronic contacts? You can't eat the stuff, and whole civilizations have come and gone without any knowledge of, or at least any use of gold. What makes someone a gold bug, and why do we seem to believe that wealth is calculable in terms of gold?
I have applied for membership to the Junior Mugambo Rangers (JMRs) and may soon be accepted. If accepted I will receive a JMR secret decoder ring, an ID Pass allowing me access to the Mugambo Atomic Bomb Proof Bunker (MABPB) and a booklet that explains why when tshtf that people rush to buy gold. I will update the status of my application as I receive further info... :)
Good question, Never - and one I subconsciously asked myself many times - until I bought some.
Just try getting about 10 1-oz pure gold coins in your hand, and then chink them around and listen to the sound, simultaneously watching the rich yellow colour glint enticingly in your hand. Now look in the mirror, you will notice that you have a stupid grin plastered right across your face. You'll also feel like Auric Goldfinger himself - like you'd sell your mother for more of the stuff.
There is something viscerally wonderful about gold - it just IS intoxicatingly, insanely wonderful. I can't give you a better explanation, but I don't think it's about to lose its appeal.
Regards Chris
Gold has always been valuable to every culture that had access to it. The Inca made jewelry and ornaments of gold and valued it highly though they had no contact with other cultures that valued gold. For this reason gold could, and can in the future, be used as a medium of exchange or money. Gold has value because it is has great malleability and never rusts or tarnishes. It can be made into jewelry or even golden religious icons.
Being able to have a medium of exchange greatly enhances the trading ability of any culture. Gold has always been used as a medium of exchange and it likely always will be. Therefore it will always be cherished and hold great value to those who possess it.
Ron Patterson