Holy mackerel!! Phil Flynn, the most quoted oil trader this side of Cantarel is now starting to at least wonder about the possibility of peak oil. This is from his daily commentary that ran yesterday:
Then low and behold in just a few short trading sessions oil rallied close to 9 dollars a barrel. That kind of a move used to take years and now it is happening in days. I mean come on!
The larger issue of course is the big picture peak oil stuff. Does a recession really matter if we are running out of oil? With all the bullish fundamentals that have driven oil for the last 5 years we only added roughly 10 dollars to the highs for oil a year. That was in the backdrop of a growing and expanding economy. Now we add 30 into a slowing economy! The only thing that can explain that is either we are seeing the peak oil production and the sudden realization by the masses that we are running out of oil or more likely bulls on steroids! Or maybe just maybe this is a last desperate to take out $100 a barrel before we crash into the sixties!
This guy is all over CNBC, Fox Business, and is by far the most quoted oil trader in newspaper stories. In the past he has dismissed peak oil worriers as a joke. If he starts to talk about peak oil with the megaphone he has, how long until peak oil is on the front cover of Time magazine?
How many POers think oil prices will decline this year? We have recession and a boost from megaprojects in 2008. I'm really not sure what will happen, but I wouldn't be surprised if oil dropped to say $70-$80 sometime during the year.
Jim Puplava discusses resources limits in Hour #3 this morning. He is not anticipating lower energy prices: www.financialsense.com
My take on the issue, as ever, is net export capacity. For example, if the US were the sole source of crude oil for the world, crude oil production would have increased from 1945 to 1970, but net oil exports would have ceased in the Forties.
"
Vietnam to slash coal exports by a third in 2008
HANOI (Reuters) - Vietnam, a key coal supplier to Japan and China, will slash coal exports this year by more than 32 percent to about 22 million tonnes to save more for new power plants at home, a government official said on Friday."
That last note is interesting. CBOT has rice above $16 and all guesses are it's only going higher. How much have your costs gone up? How constrained are you from betting on good prices for your crop? How many other producers are in positions similar to yours? Your production is a known zero if you don't plant, any guess at all what sort of declines we may be seeing globally/
Let me try again. How high a price would you need locked in to justify an outlay now for fertilizer? Are there other producers who can pick up slack who will have lower costs?
As long as I can remember farmers go on and on over costs and prices and then they go ahead and plant and hope for the best. If you really just can't plant it sounds like a very big story to me.
Rice lost out to cotton, soy. The return on these 2 just
out weighs the former. We sell in advance.
Fertilizer was just the tipping point.
BTW- We need $20 the bushel on wheat to make up for destroyed crop rotation.
From Delta Farm Press:
During its annual meeting in Memphis, Tenn., Council Chairman John Pucheu cited a 14-point package that made improvements in the cotton-marketing loan as one of the best features of the new farm bill. That — and one providing assistance to the U.S. textile industry — appear to have been left out of the proposal.
The American Soybean Association said the Peterson-Goodlatte plan “reversed the limited progress ASA achieved in the House bill to provide more equitable income support to soybeans and eliminates funding to make U.S. biodiesel producers competitive with imported biodiesel.”
The National Corn Growers Association, which has been working since the last farm bill to try to pass an improved counter-cyclical program, was watching the revenue counter-cyclical program it supported in the House bill fade off into the sunset.
“This framework does not contain a revenue program growers will view as an option,” said NCGA President Ron Litterer. “It simply fails to address the changes in our industry, the realities of today’s marketplace, and the increasing levels of risk farmers are facing well into the future.”
Yep, Industrial NPK [I-NPK] is now having an ELM effect on availability and prices. I was hoping Organic NPK [O-NPK] would be ramping up by now bigtime to help tamper I-NPK pricing increases, but it appears the relative 20:1 O-NPK/I-NPK weight ratio is a big hindrance to moving the compost and manures very far:
To begin with, you can assume that a ton of manure is roughly equivalent to 100 pounds of packaged fertilizer. For example, 1 ton of fresh horse or steer leavings (with bedding) which contains about 10 pounds of nitrogen, 5 pounds of phosphorus, and 10 pounds of potassium-is more or less equal to 100 pounds of commercially made 10-5-10 soil supplement. On the other hand, 2,000 pounds of dairy cow or pig excrement is slightly less nutritious ... while the same amount of poultry droppings (equaling about 100 pounds of 25-15-10 fertilizer) is a great deal more valuable. And keeping in mind that rotted waste is twice as potent as raw, 1 ton of fermented equine or bovine manure is comparable to 100 pounds of 20-10-20.
As to the rate at which chemicals are released into the ground, the general rule is that most manures let go about half their "vitamins" during the first year ... around 25% the next ... close to 12.5% the third ... and so on. Two exceptions, both of which release the bulk of their nutrients within the initial 12 months, are cow dung (75%) and hen droppings (about 90%).
----------------------------------
This link has a lot more useful info besides the teaser excerpt above.
Maybe the best way to immediately cost-effectively improve manure movement from the city back out to the rural area is to fill the trunk of any rural-heading vehicle full of compost/manure, then require them to dump the load at designated rural spots convenient for the farmers to field-apply. Instead of car-pooling--how about poop-pooling?
EDIT: Wouldn't it be fun to fill the storage area of a Bentley, Jaguar, Mercedes, or Hummer full of pig manure? :)
Bob;
Do you or others have any numbers on the amount that a farm's livestock leavings helps as fertilizer- to offset the costs of feeding that livestock, or the acreage required to feed livestock? Not to suggest that these outputs would be a wash against the feed inputs, but I don't know if I've ever heard any arguments for the savings generated when a farm has livestock supplying a portion of the fertilizer requirement.
From Michael Pollan "The Omnivore's Dilemma"
'Industrial agriculture took a solution (the classic farm), and turned it into several, separate problems..' (paraphrased from memory)
Thxs for responding. Sorry, I don't have any numbers, but I sure wish some economists would look at the entire nutrient-loop costs and benefits of O-NPK compost and manure vs I-NPK.
Recall my earlier post: when 1914 I-K hit $10,500/ton inflation adjusted, yet most farmers probably predominately used O-NPK; I-NPK was mostly used to supplement O-NPK to prevent a Liebig Minimum. It is easy to see how our modern farming methods, being highly reliant upon long distance and energy intensive I-NPK, could be hammered by rising farming input prices. Restoring the O-NPK loop from city back to the farm may be real important soon.
Arizona has lots of wealthy people who own second vacation homes in the highlands or vacationers who travel from the desert to the mountains to get a respite from the summer heat. Lots of them have blinged-out crewcab pickups that never haul anything but luggage and golf clubs. What if they hauled manure from the outlying pigfarm to the private golf course by their vacation home, and then hauled more manure for their private city golf courses on the return trip?
In exchange for this two-way hauling, maybe they could be rewarded with free golf rounds, free pork, or reduced country club membership to offset the costs of I-NPK for the golf courses, and the aquifer depletion and groundwater pollution from the pig manure holding tanks.
Just musing on ways to make every vehicle move O-NPK while we still can, but I still think SpiderWebRiding + Alan's Ideas are our best hope for machete' moshpit reduction.
They present a good case, but they didn't address that the new capacity coming online this year is about 100% more than came online in 2007 (via megaprojects wiki).
(3) Based on a pretty good grasp of 2007 data, I estimate that the top five net oil exporters are going to show another drop of about one mbpd in net oil exports in 2007, roughly the same as 2006, on track to approach zero net exports in the 2030 time frame.
(1,2) Yeah, but it's still 100% more expected than in 2007. See my comment to Leanan.
(3) I certainly think net exports will be interesting to watch over then next decade, but it's more than just the top five. Rembrandt's last oil monthly has liquid exports sort of flat.
And the problem for the smaller exporters in the bottom half is that they peak and decline faster than the larger exporters in much the same way that smaller fields peak and decline faster than the super giant fields. For example, even the Wall Street Journal is talking about Mexico, a top 10 net exporter, hitting zero net exports in the 2015 time frame.
Unless trends change, China`s economy will be larger than the USA at that time. The latest stat show China`s exports up 26.7% YOY. There has never been an economy of this size growing at this rate (the growth eclipses the growth of the USA in its heyday).
Yes regards China and the US heyday. What you describe is exactly the impression one gets firsthand. There has never been or ever will be again anything on the earth to equal the sheer scale of the thing. Unimaginable enormity. Literally sucking up the planet's resources at present.
There's a lot of cognitive dissonance concerning coal at the moment. I regularly see side-by-side articles in DrumBeat declaring the end of coal and the resurgence of coal. Unfortunately for climate change, I think the world is going to gorge on coal the way a starving man gorges on a hot meal.
Instead of a dissonance, it reminds me of the windup to a missed punch.
The image in my mind is of the Death-Star, just starting it's Destructo-beam to abolish the Rebel Base, at the very moment that it is going to blow up from Luke's Direct hit.
"Jimmy: I've achieved nothing!
"Joey: You're missin' the point. The success of the band was irrelevant - you raised their expectations of life, you lifted their horizons. Sure we could have been famous and made albums and stuff, but that would have been predictable. This way it's poetry.
IMO, the Megaprojects wiki is more a way to keep track of industry predictions than a projection of actual production.
In 2005 and 2006, everyone was saying that 2006 was going to be rough, but in 2007, all kinds of new production was coming online. Didn't quite work out that way. Now it's 2008 when all the new production is coming online.
My projection: next year at this time, people will be saying that 2009 is when that wave of new production is going to come online.
IMO, the Megaprojects wiki is more a way to keep track of industry predictions than a projection of actual production.
In 2005 and 2006, everyone was saying that 2006 was going to be rough, but in 2007, all kinds of new production was coming online. Didn't quite work out that way. Now it's 2008 when all the new production is coming online.
Well, I completely buy that the megaprojects is sort of a best case, that there will be project slippage, that obviously there will be depletion, and so on.
However, I'd imagine these factors will be similar in 2008 as they were in 2007. So maybe these factors mean something like 50% of expected capacity actually comes online. That would still mean the actual new capacity coming online in 2008 will be greater than 2007.
So maybe these factors mean something like 50% of expected capacity actually comes online.
We'll see. The "bottom up" projections have proven to be way optimistic.
That would still mean the actual new capacity coming online in 2008 will be greater than 2007.
That doesn't matter. What does matter is if it's enough to make up for declining production in the existing fields. Prudhoe proved to be just a bump on the backside of the US Hubbert's peak. And I don't see any Prudhoes on the horizon now.
I'm not ruling out one last hurrah...but we've been waiting for this wave of new production since 2005. It's looking more and more like "Jam tomorrow, but never jam today."
I have frequently asked how a Mega Projects analysis would have handled the East Texas Field in 1972. It was then showing, in its fifth decade of production, a multi-year long increase in production, but then it started a terminal decline in 1973, never to recover.
My point is that the decline from these big fields that are watering out--Cantarell, North Ghawar, Burgan, Daqing, etc.--is going to overwhelm the smaller fields coming on line.
And as I have pointed out several times, the annual Lower 48 decline rate at the end of 1972 was -0.8%/year, after having peaked in 1970. At the end of 2007, the annual world decline rate relative to 2005, will be quite similar, probably about -0.5%/year.
That doesn't matter. What does matter is if it's enough to make up for declining production in the existing fields.
This is my point. IF (yeah, big if) there is more capacity coming online than did in 2007 and if declines in existing production in 2008 are similar to 2007 then considering that production was flat in 2007, you'd expect production to rise in 2008.
Best to see it as a sort of upper limit or best-case ceiling. We're not going to see more capacity come on line that what has been planned, but there are any number of things that cause those things to run into problems and delays or even be canceled.
Furthermore, if we run into various problems making things happen at this level, what basis should anyone have to think that there can or will be a massive ramping up of megaprojects in the future? Without such a ramping up, lines drawn into the future with an upward slope look pretty incredible.
Prices at the pump in the US will not decline until real inflation is reigned in...I dont see that happening this year or next. Inflation is simply a disguised tax so it is probably a good thing if it causes a decrease in consumption that doesnt decrease the GDP...Of course, we wont know if cause/effect occurs, because the Gov isnt going to make the stats available. Aint it great? :)
Volatility will be the main attribute of oil prices this year, I think. So many things affect the price of oil, that it is impossible to figure out how they will interact -- relative value of the dollar, recession or even depression, weather (we've been lucky the past two years), politics (Bush really wants to hit Iran), and just plain luck. I do think the general trend will continue upwards, and I think there could be some very high spikes during the year depending on how things break. But I also wouldn't be too surprised to see oil down in the 70s at some point.
I think politics/leader psychology will have a much, much larger effect in the near future and here's why. When/if the peak oil possibility hits critical mass of awareness on the global stage, there will be Chavez times 20 going on around the world. Exporting countries will start protecting their resources more and more and wanting more stakes in what happens to those resources (i.e., current Russia). So, even if the "data" show us with ample supply and production, it does not mean diddly squat if the politicians decide to sit on their resources or hand them out only to "friendly" nations. This goes against the "oil fungibility" concept...we can just buy from another exporter. All oil exports are the same, right? Same price, same quality, same terms...hogwash!!
It is Peak Oil Lite as Robert likes to call it, but it could go on ad infinitum until the real deal hits the world.
"Exporting countries will start protecting their resources more and more and wanting more stakes in what happens to those resources (i.e., current Russia)"
In the end, this means that the peak will come sooner and the decline will be more shallow.
Bush hits Iran,and we get to spend the rest of our lives living in a scifi movie,I.E."The Postman".It would get so bad,so quick,I would barely have time to get my costume right...
Yes, 'Bush really wants to hit Iran'...and so does Israel. But, I dont see it in the cards now. The timing of this administration is incredibly bad...but, they are enept so what to expect?
If anyone hits Iran and does not take out all the missles targeting the Straits of Hormuz, Iran will sink a few tankers in the straits and no other tankers will attempt to transit the Persian Gulf. The tanker owners will not be able to purchase insurance and the crews are not suicidal. World economy stops. Then the SCO will designate their own 'Axis of Evil'. US and Israel will be at the top of the list. Iran will encourage the Shia in Iraq to disrupt all oil/electricity in Iraq plus step up attacks on US forces there.
The US would eventually be forced to the bargaining table with Iran to restore safe passage for tankers transiting the Gulf. This is a disaster scenario for the US and world economies and would put an end to US influence in the ME and probably an end to the US Dollar as a reserve currency. Of course, it could escalate to nuclear war. I dont believe anyone is ready for that possibility.
Gas at the pump is going to continue to rise as the Fed lowers interest rates and the dollar falls against other currencies. There might be some fluctuation in price but I dont see oil going below $75 bbl unless economies collapse and world depression ensues.
Just my take on the situation ... most everybody has one.
We had a "tanker war" back during the Iran/Iraq conflict and traffic didn't stop - 546 vessels damaged, 430 civilians killed. This was Iraq making trouble at first, and then both sides going at tankers. It came to a screeching halt when Russians chartered tankers and others flew the U.S. flag.
Today things are a little different. Iran can hit much harder now than they could just a year after their revolution, having had decades to arm, train, and plan. The United States will react much more swiftly but I am not sure we have a battle plan that can be successful given how thin our troops are stretched and how much Iranian coast line would need to be covered. An aerial interdiction program like we had for SCUDs during the first Gulf War seems likely, but anti-ship missiles are much smaller and more easily hid than the SCUD setups.
As I continue to say, the price of oil will go up and down - but there will be more ups than downs, and the ups will be up more than the downs will be down.
I never know what to make of Phil Flynn. He is at least peak oil aware, which many of the talking heads aren't (or at least won't admit to). I get the feeling he's a peak oil agnostic. Even in this article, he ends by saying it's "more likely bulls on steroids" than peak oil. But at least he mentions it.
Holy mackerel!! Phil Flynn, the most quoted oil trader this side of Cantarel is now starting to at least wonder about the possibility of peak oil. This is from his daily commentary that ran yesterday:
This guy is all over CNBC, Fox Business, and is by far the most quoted oil trader in newspaper stories. In the past he has dismissed peak oil worriers as a joke. If he starts to talk about peak oil with the megaphone he has, how long until peak oil is on the front cover of Time magazine?
How many POers think oil prices will decline this year? We have recession and a boost from megaprojects in 2008. I'm really not sure what will happen, but I wouldn't be surprised if oil dropped to say $70-$80 sometime during the year.
Jim Puplava discusses resources limits in Hour #3 this morning. He is not anticipating lower energy prices: www.financialsense.com
My take on the issue, as ever, is net export capacity. For example, if the US were the sole source of crude oil for the world, crude oil production would have increased from 1945 to 1970, but net oil exports would have ceased in the Forties.
From Leanan:
"
Vietnam to slash coal exports by a third in 2008
HANOI (Reuters) - Vietnam, a key coal supplier to Japan and China, will slash coal exports this year by more than 32 percent to about 22 million tonnes to save more for new power plants at home, a government official said on Friday."
From Arkansas:
McGowan Farms will grow zero rice this year.
Reason.
Fertilizer too costly.
ELM comes to coal. We could really use an in-depth analysis of coal export markets here at TOD.
That last note is interesting. CBOT has rice above $16 and all guesses are it's only going higher. How much have your costs gone up? How constrained are you from betting on good prices for your crop? How many other producers are in positions similar to yours? Your production is a known zero if you don't plant, any guess at all what sort of declines we may be seeing globally/
Let me try again. How high a price would you need locked in to justify an outlay now for fertilizer? Are there other producers who can pick up slack who will have lower costs?
As long as I can remember farmers go on and on over costs and prices and then they go ahead and plant and hope for the best. If you really just can't plant it sounds like a very big story to me.
Hey, OH,
Yes. We've had rice since 1976.
Rice lost out to cotton, soy. The return on these 2 just
out weighs the former. We sell in advance.
Fertilizer was just the tipping point.
BTW- We need $20 the bushel on wheat to make up for destroyed crop rotation.
From Delta Farm Press:
During its annual meeting in Memphis, Tenn., Council Chairman John Pucheu cited a 14-point package that made improvements in the cotton-marketing loan as one of the best features of the new farm bill. That — and one providing assistance to the U.S. textile industry — appear to have been left out of the proposal.
The American Soybean Association said the Peterson-Goodlatte plan “reversed the limited progress ASA achieved in the House bill to provide more equitable income support to soybeans and eliminates funding to make U.S. biodiesel producers competitive with imported biodiesel.”
The National Corn Growers Association, which has been working since the last farm bill to try to pass an improved counter-cyclical program, was watching the revenue counter-cyclical program it supported in the House bill fade off into the sunset.
“This framework does not contain a revenue program growers will view as an option,” said NCGA President Ron Litterer. “It simply fails to address the changes in our industry, the realities of today’s marketplace, and the increasing levels of risk farmers are facing well into the future.”
Thanks. That makes sense. I'm still scared tho.
Hello Oldhippie,
Yep, Industrial NPK [I-NPK] is now having an ELM effect on availability and prices. I was hoping Organic NPK [O-NPK] would be ramping up by now bigtime to help tamper I-NPK pricing increases, but it appears the relative 20:1 O-NPK/I-NPK weight ratio is a big hindrance to moving the compost and manures very far:
http://www.motherearthnews.com/Sustainable-Farming/1983-03-01/Make-the-M...
----------------------------
MAKE THE MOST OF THE MANURE
To begin with, you can assume that a ton of manure is roughly equivalent to 100 pounds of packaged fertilizer. For example, 1 ton of fresh horse or steer leavings (with bedding) which contains about 10 pounds of nitrogen, 5 pounds of phosphorus, and 10 pounds of potassium-is more or less equal to 100 pounds of commercially made 10-5-10 soil supplement. On the other hand, 2,000 pounds of dairy cow or pig excrement is slightly less nutritious ... while the same amount of poultry droppings (equaling about 100 pounds of 25-15-10 fertilizer) is a great deal more valuable. And keeping in mind that rotted waste is twice as potent as raw, 1 ton of fermented equine or bovine manure is comparable to 100 pounds of 20-10-20.
As to the rate at which chemicals are released into the ground, the general rule is that most manures let go about half their "vitamins" during the first year ... around 25% the next ... close to 12.5% the third ... and so on. Two exceptions, both of which release the bulk of their nutrients within the initial 12 months, are cow dung (75%) and hen droppings (about 90%).
----------------------------------
This link has a lot more useful info besides the teaser excerpt above.
Maybe the best way to immediately cost-effectively improve manure movement from the city back out to the rural area is to fill the trunk of any rural-heading vehicle full of compost/manure, then require them to dump the load at designated rural spots convenient for the farmers to field-apply. Instead of car-pooling--how about poop-pooling?
EDIT: Wouldn't it be fun to fill the storage area of a Bentley, Jaguar, Mercedes, or Hummer full of pig manure? :)
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Bob;
Do you or others have any numbers on the amount that a farm's livestock leavings helps as fertilizer- to offset the costs of feeding that livestock, or the acreage required to feed livestock? Not to suggest that these outputs would be a wash against the feed inputs, but I don't know if I've ever heard any arguments for the savings generated when a farm has livestock supplying a portion of the fertilizer requirement.
From Michael Pollan "The Omnivore's Dilemma"
'Industrial agriculture took a solution (the classic farm), and turned it into several, separate problems..' (paraphrased from memory)
Bob Fiske
Hello Jokuhl,
Thxs for responding. Sorry, I don't have any numbers, but I sure wish some economists would look at the entire nutrient-loop costs and benefits of O-NPK compost and manure vs I-NPK.
Recall my earlier post: when 1914 I-K hit $10,500/ton inflation adjusted, yet most farmers probably predominately used O-NPK; I-NPK was mostly used to supplement O-NPK to prevent a Liebig Minimum. It is easy to see how our modern farming methods, being highly reliant upon long distance and energy intensive I-NPK, could be hammered by rising farming input prices. Restoring the O-NPK loop from city back to the farm may be real important soon.
Arizona has lots of wealthy people who own second vacation homes in the highlands or vacationers who travel from the desert to the mountains to get a respite from the summer heat. Lots of them have blinged-out crewcab pickups that never haul anything but luggage and golf clubs. What if they hauled manure from the outlying pigfarm to the private golf course by their vacation home, and then hauled more manure for their private city golf courses on the return trip?
In exchange for this two-way hauling, maybe they could be rewarded with free golf rounds, free pork, or reduced country club membership to offset the costs of I-NPK for the golf courses, and the aquifer depletion and groundwater pollution from the pig manure holding tanks.
Just musing on ways to make every vehicle move O-NPK while we still can, but I still think SpiderWebRiding + Alan's Ideas are our best hope for machete' moshpit reduction.
JB Hunt got started by hauling rice hulls from Stuttgart to NW AR.
Truckers are now hauling poultry waste down to farms in E AR.
They present a good case, but they didn't address that the new capacity coming online this year is about 100% more than came online in 2007 (via megaprojects wiki).
(1) Estimated new capacity coming on line.
(2) How much production was lost to depletion?
(3) Based on a pretty good grasp of 2007 data, I estimate that the top five net oil exporters are going to show another drop of about one mbpd in net oil exports in 2007, roughly the same as 2006, on track to approach zero net exports in the 2030 time frame.
(1,2) Yeah, but it's still 100% more expected than in 2007. See my comment to Leanan.
(3) I certainly think net exports will be interesting to watch over then next decade, but it's more than just the top five. Rembrandt's last oil monthly has liquid exports sort of flat.
And the problem for the smaller exporters in the bottom half is that they peak and decline faster than the larger exporters in much the same way that smaller fields peak and decline faster than the super giant fields. For example, even the Wall Street Journal is talking about Mexico, a top 10 net exporter, hitting zero net exports in the 2015 time frame.
hitting zero net exports in the 2015 time frame.
Is it funny that doesn't sound as bad as Hitting zero net imports in 6-8 years timeframe.
2012, 2018, 2025 sound so far away still for us. It's like our internal clock is still back a few years.
But 4 years away, 10 years away, sounds alot closer for some reason.
During those same 4 years, 10 etc years Ghawar will start dropping/diving, the Greater Depression will have hit.
There might even be a war or something else. Amazing times.
Unless trends change, China`s economy will be larger than the USA at that time. The latest stat show China`s exports up 26.7% YOY. There has never been an economy of this size growing at this rate (the growth eclipses the growth of the USA in its heyday).
Yes regards China and the US heyday. What you describe is exactly the impression one gets firsthand. There has never been or ever will be again anything on the earth to equal the sheer scale of the thing. Unimaginable enormity. Literally sucking up the planet's resources at present.
I=P*A*T
There's a lot of cognitive dissonance concerning coal at the moment. I regularly see side-by-side articles in DrumBeat declaring the end of coal and the resurgence of coal. Unfortunately for climate change, I think the world is going to gorge on coal the way a starving man gorges on a hot meal.
Instead of a dissonance, it reminds me of the windup to a missed punch.
The image in my mind is of the Death-Star, just starting it's Destructo-beam to abolish the Rebel Base, at the very moment that it is going to blow up from Luke's Direct hit.
"Jimmy: I've achieved nothing!
"Joey: You're missin' the point. The success of the band was irrelevant - you raised their expectations of life, you lifted their horizons. Sure we could have been famous and made albums and stuff, but that would have been predictable. This way it's poetry.
Roddy Doyle - The Commitments
IMO, the Megaprojects wiki is more a way to keep track of industry predictions than a projection of actual production.
In 2005 and 2006, everyone was saying that 2006 was going to be rough, but in 2007, all kinds of new production was coming online. Didn't quite work out that way. Now it's 2008 when all the new production is coming online.
My projection: next year at this time, people will be saying that 2009 is when that wave of new production is going to come online.
Well, I completely buy that the megaprojects is sort of a best case, that there will be project slippage, that obviously there will be depletion, and so on.
However, I'd imagine these factors will be similar in 2008 as they were in 2007. So maybe these factors mean something like 50% of expected capacity actually comes online. That would still mean the actual new capacity coming online in 2008 will be greater than 2007.
We'll see. The "bottom up" projections have proven to be way optimistic.
That doesn't matter. What does matter is if it's enough to make up for declining production in the existing fields. Prudhoe proved to be just a bump on the backside of the US Hubbert's peak. And I don't see any Prudhoes on the horizon now.
I'm not ruling out one last hurrah...but we've been waiting for this wave of new production since 2005. It's looking more and more like "Jam tomorrow, but never jam today."
I agree.
I have frequently asked how a Mega Projects analysis would have handled the East Texas Field in 1972. It was then showing, in its fifth decade of production, a multi-year long increase in production, but then it started a terminal decline in 1973, never to recover.
My point is that the decline from these big fields that are watering out--Cantarell, North Ghawar, Burgan, Daqing, etc.--is going to overwhelm the smaller fields coming on line.
And as I have pointed out several times, the annual Lower 48 decline rate at the end of 1972 was -0.8%/year, after having peaked in 1970. At the end of 2007, the annual world decline rate relative to 2005, will be quite similar, probably about -0.5%/year.
This is my point. IF (yeah, big if) there is more capacity coming online than did in 2007 and if declines in existing production in 2008 are similar to 2007 then considering that production was flat in 2007, you'd expect production to rise in 2008.
Best to see it as a sort of upper limit or best-case ceiling. We're not going to see more capacity come on line that what has been planned, but there are any number of things that cause those things to run into problems and delays or even be canceled.
Furthermore, if we run into various problems making things happen at this level, what basis should anyone have to think that there can or will be a massive ramping up of megaprojects in the future? Without such a ramping up, lines drawn into the future with an upward slope look pretty incredible.
Prices at the pump in the US will not decline until real inflation is reigned in...I dont see that happening this year or next. Inflation is simply a disguised tax so it is probably a good thing if it causes a decrease in consumption that doesnt decrease the GDP...Of course, we wont know if cause/effect occurs, because the Gov isnt going to make the stats available. Aint it great? :)
Volatility will be the main attribute of oil prices this year, I think. So many things affect the price of oil, that it is impossible to figure out how they will interact -- relative value of the dollar, recession or even depression, weather (we've been lucky the past two years), politics (Bush really wants to hit Iran), and just plain luck. I do think the general trend will continue upwards, and I think there could be some very high spikes during the year depending on how things break. But I also wouldn't be too surprised to see oil down in the 70s at some point.
I think politics/leader psychology will have a much, much larger effect in the near future and here's why. When/if the peak oil possibility hits critical mass of awareness on the global stage, there will be Chavez times 20 going on around the world. Exporting countries will start protecting their resources more and more and wanting more stakes in what happens to those resources (i.e., current Russia). So, even if the "data" show us with ample supply and production, it does not mean diddly squat if the politicians decide to sit on their resources or hand them out only to "friendly" nations. This goes against the "oil fungibility" concept...we can just buy from another exporter. All oil exports are the same, right? Same price, same quality, same terms...hogwash!!
It is Peak Oil Lite as Robert likes to call it, but it could go on ad infinitum until the real deal hits the world.
"Exporting countries will start protecting their resources more and more and wanting more stakes in what happens to those resources (i.e., current Russia)"
In the end, this means that the peak will come sooner and the decline will be more shallow.
This isn't necessarily such a bad thing.
Bush hits Iran,and we get to spend the rest of our lives living in a scifi movie,I.E."The Postman".It would get so bad,so quick,I would barely have time to get my costume right...
And they would be hunting politicians with dogs
Hope is a strong humane trait.
Yes, 'Bush really wants to hit Iran'...and so does Israel. But, I dont see it in the cards now. The timing of this administration is incredibly bad...but, they are enept so what to expect?
If anyone hits Iran and does not take out all the missles targeting the Straits of Hormuz, Iran will sink a few tankers in the straits and no other tankers will attempt to transit the Persian Gulf. The tanker owners will not be able to purchase insurance and the crews are not suicidal. World economy stops. Then the SCO will designate their own 'Axis of Evil'. US and Israel will be at the top of the list. Iran will encourage the Shia in Iraq to disrupt all oil/electricity in Iraq plus step up attacks on US forces there.
The US would eventually be forced to the bargaining table with Iran to restore safe passage for tankers transiting the Gulf. This is a disaster scenario for the US and world economies and would put an end to US influence in the ME and probably an end to the US Dollar as a reserve currency. Of course, it could escalate to nuclear war. I dont believe anyone is ready for that possibility.
Gas at the pump is going to continue to rise as the Fed lowers interest rates and the dollar falls against other currencies. There might be some fluctuation in price but I dont see oil going below $75 bbl unless economies collapse and world depression ensues.
Just my take on the situation ... most everybody has one.
We had a "tanker war" back during the Iran/Iraq conflict and traffic didn't stop - 546 vessels damaged, 430 civilians killed. This was Iraq making trouble at first, and then both sides going at tankers. It came to a screeching halt when Russians chartered tankers and others flew the U.S. flag.
Today things are a little different. Iran can hit much harder now than they could just a year after their revolution, having had decades to arm, train, and plan. The United States will react much more swiftly but I am not sure we have a battle plan that can be successful given how thin our troops are stretched and how much Iranian coast line would need to be covered. An aerial interdiction program like we had for SCUDs during the first Gulf War seems likely, but anti-ship missiles are much smaller and more easily hid than the SCUD setups.
Double post
IIRC WTI hit an all time high daily close on 7 Aug of 06, then we waited untill 31 July of 07 to break thru that high.
That is less than 7 months ago and now we are talking about oil might be back in the Seventies this year.
It seems the humane mind can adjust quite rapidly to be surprised by $70 oil!
As I continue to say, the price of oil will go up and down - but there will be more ups than downs, and the ups will be up more than the downs will be down.
I never know what to make of Phil Flynn. He is at least peak oil aware, which many of the talking heads aren't (or at least won't admit to). I get the feeling he's a peak oil agnostic. Even in this article, he ends by saying it's "more likely bulls on steroids" than peak oil. But at least he mentions it.
The CEO of Shell Oil said the other day that the futures markets probably impact