 | Saudi Arabia Announces They Will Produce More Oil | The Oil Drum | Saudis announce oil production increases...again...and again...and again... |  |
343 comments on DrumBeat: June 23, 2008
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343 comments on DrumBeat: June 23, 2008
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Some interesting comments on CNBC at about 8:25 Central time--lots of Shocked! Shocked! realizations that the Saudis have very little ability to significantly increase production, especially light/sweet.
From May, 2007 to May, 2008, oil prices increased at about 6% per month. In June, we are on track for a 6% range increase:
$125 + 6% ($8) = $133
For the time being at least, a price increase of 6% per month appears necessary to balance demand against declining net oil exports. What is happening now is a continuation of what started in 2005 in poorer countries: a smaller number of consumers paying a higher unit price for a smaller volume. It's just that forced energy conservation has moved up the food chain, and it is now having widespread effects in wealthier countries.
I expect to continue to see a parallel 6%(+) per month rate of increase in delusional thinking.
Regarding post-peak delusional thinking by former swing producers, the following comment was in response to a question from me, in 2005:
Texas has enough oil supplies for 'many decades': Tinker
Baghdad Bob has taken up residence in Saudi Arabia. Or is he dressed in drag and working for CNBC?
The markets, apparently, see this as so much noise. But wasn't most of the world, excluding the U.S., taking action on global warming? And how does increased supply and consumption fit into that overall scheme? Only if the intent is to avoid substituting coal for oil.
How predictable that the world's "leaders" would panic at the reality of higher prices and lower supply. As usual, they are subsituting the magic of wishful thinking for a real energy policy.
It is past time to set a floor on oil; the longer reality is avoided, the worse things are going to be.
Obama is coming to the rescue, however, with his support of ethanol. We'll worry about food later, maybe sometime next week.
The big story this year (with some important exceptions, still largely ignored in the MSM) is the ongoing export decline from Russia, Norway, Mexico and Venezuela--key nearby sources of imported oil for Europe and the US respectively.
I estimate that Mexico's net oil exports fell from about 1.4 mbpd in 9/07 to about 1.1 mbpd in 5/08. At this rate, they would be at zero in about three years (from 9/07), the Fall of 2010. At half this rate, they might make it to the Fall of 2013.
BTW, Mexico might be an interesting model for another top 10 net oil exporter that is highly dependent on one field, Saudi Arabia. It appears that the big decline in Mexican production kicked in four years after their final peak, which would mean 2009 for Saudi Arabia.
The real kicker is that after they reach zero exports, they quickly become a net importer, which then increases the competition for the globally shrinking supply of available exports.
ej
Like the UK & Indonesia
I used the ELM's 28% per year and Matt Simmon's 8% per year to current world exports. Does this seem reasonable?
Also estimated is the oil deficit from export decline since 2005 compared to the deficit from the 1973 Oil Embargo. Losses from the Embargo likely over stated, are based on 4 mbpd for the entire period of the Embargo. Even if 73 Embargo is over stated, deficit for the last 3 years are 3 times greater than those of the Embargo.
Our middle case is that the top five net oil exporters (about half of world net oil exports) collectively approach zero net oil exports around 2031. My guess is that total world net oil exports in 2031 will be down by at least 75% from their 2005 peak.
Any predictions for when we hit peak delusion?
Evidence suggests the more delusion is consumed internally, the more is exported, clearly physical supplies remain abundant.
"I look at it this way... For centuries now, man has done everything he can to destroy, defile, and interfere with nature: clear-cutting forests, strip-mining mountains, poisoning the atmosphere, over-fishing the oceans, polluting the rivers and lakes, destroying wetlands and aquifers... so when nature strikes back, and smacks him on the head and kicks him in the nuts, I enjoy that. I have absolutely no sympathy for human beings whatsoever. None. And no matter what kind of problem humans are facing, whether it's natural or man-made, I always hope it gets worse." George Carlin (May 12, 1937 – June 22, 2008)
If only the ones doing the defiling and those receiving retribution from nature were the same, I would agree with this statement. Unfortunately, that's not how it works.
Those who have gotten rich raping the planet will be the most able to afford to protect themselves from it's counter-attack.
Peak delusion? I think it has peaked. What was it Dylan Ratigan said on CNBC last Fri. when the markets were plunging? Something like "Oh ... about the Saudi oil meeting and Bernanke meeting at the Fed? It doesn't matter who's meeting with who. Nothing changes the (bear market mentality)."
Dylan is looking a big depressed these days. He's a quick study I think. He and a number of the other CNBC staff are no longer as deluded as they once were.
Peak Delusion has a direct relationship with Peak I Told Ya So's. About the time we are tired of the told ya so's, the delusionists are tired of hearing it.
Hi WT,
That would be a hard act to follow...here's hoping you are wrong :P
July would be avg 141 (+8)
Aug would be avg 149.50 (+8.50).
Yikes!
However it still would be only 21 cents a cup then, for possibly the most precious substance in the history of mankind. Not smarter than yeast definitely.
So if we continue what PeakTO and WT have written :-
Jul = $141.00
Aug = $149.46
Sep = $158.42
Oct = $167.93
Nov = $178.00
Dec = $188.68
Jan = $200.00
Feb = $212.01
Mar = $224.73
Apr = $238.21
May = $252.50
Jun = $267.66
Jul = $283.71
Yikes x 2 !!!
If you use the 70 rule then 6% means oil will double in price every year (assuming %6 holds true)
Those figures are averages for each month - if you watch the daily data it fluctuates up and down in a range - so, which month do we see $150 oil. $150 Tapis in June?
If the price goes up by 6% every month, you will see $150 oil by August (Sep contract).
Hello Suyog,
I would expect I-NPK pricing to rise just as fast, or even faster, too. It depends on how much total [and depleting] FFs are dedicated to this very long and complex global supply chain.
Remember: the depleting P & K ores [just like oil-- first guano, then on to the next lowest fruit!], the depleting sour natgas & sour crude [cheapest sulfur source], and the Haber-Bosch nitrogen are essentially free--it is just the huge energy requirements and total global infrastructure that determine the supply, and obviously the demand for food won't shrink as long as the population is still increasing at 70 million per year.
Has anybody found that Ghawar-sized batcave full of guano yet? Oh wait, ..I forgot.. they are experiencing dieoff from white-nose fungus. I suggest the big ramping of O-NPK recycling instead, because I don't see people everywhere racing to build bat shelters, and making bat biologists the highest paid people on the planet.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Any idea what carrying capacity/crop yields in the U.S. would be without I-NPK? How much food could we make using manure/rotation etc.?
What would be the U.S. carrying capacity using only organic methods?
Hello Consumer,
Thxs for responding. I am pressed for time, so no supporting links.
No expertise here, but what I have read seems to indicate that commercial harvest yields would drop by more than 50% instantly [if no O-NPK is recycled back to the field], and the subsequent additional crop rotation to nitrogen-fixing plants [to be totally plowed under] would reduce the grains available by an additional significant percentage [20% more?]. Good luck trying to stay above a Liebig Minimum.
If O-NPK is used abundantly & immediately: the commercial yield is still expected to initially decline, but then as the topsoil becomes organic over time, healthy with micro-organisms, and full of mulch--the yields are equal or better than using I-NPK. I recall that the conversion process takes about 5 years or more [Rhodale Institute?].
Lots of people can starve during that 5 year conversion process. :(
Bob,
You might want to check out rice. Seems I read that it gives back almost every nutrient taken. One of the reasons that the Asians can plant and grow it so well with little commercial NPK inputs.
As I drove back from Oklahoma today I noticed a huge increase in rice plantings in the bootheel of Missouri. I thought that NE Arkansas was the big guys on rice but now it must have qualities to make it able to compete favorably with the normal corn-wheat-soybean mantra.
Also once you plane and setup your ground for rice I think you are pretty much locked into it and will then go with just that crop on that prepared acreage.
Myself I love rice and even eat it for breakfast with milk,butter and sugar. With soysauce the rest of the time or with Beans(ala 'hopping john')
Best,
airdale
The problem with rice is water. It requires huge amounts of water to grow, and water shortages are actually causing many Asian farmers to switch away from it.
Most of the water used in commercial rice growing is to control weeds. Methods are being developed to do away with the flooding stage http://www.sciencedaily.com/releases/2007/10/071014202450.htm. I discovered this when I looked into the possibility of growing a small rice field on my property. The instructions from the seed company in which I located rice seeds: http://www.organicaseed.com/rice.html
Have you tried growing any rice? I, too, have been thinking about growing some. I recently read an article in the NY Times about SRI (System of Rice Intensification)promoted by Dr. Uphoff of Cornell. Have you heard much about this? I would love to be able to grow some basmati rice in my backyard.
I think it depends on what kind of rice you are growing. Lowland rice needs flooded paddies while upland rice can be grown on dry ground.
Apparently with lowland rice the water isn't just for weed control. The rice plant needs it to grow.
For innovative techniques for rice growing, check this out:
http://ciifad.cornell.edu/sri/
This is strange. I replied to bruce's post when there was no replies. But Now it looks like my reply is attached to sandiego's post.
This must be a bug.
Also, I was wrong in my post, rice doesn't need the water to grow, but that type of cultivation has the highest yields so is the most common. Sorry bout that.
Well, looks like its formated correctly when I look at the whole db. But if I just look at the subthread its formatted incorrectly.
http://www.theoildrum.com/node/4204/367051
My girlfriend is from Issan (Northeast Thailand) and has been growing rice since before she could walk. She tells me that people do grow some varieties of rice with little water - like sticky rice, red rice and black rice. She says that often they don't grow that rice due to insects and birds which are much more of a problem than when the water is deep. Also there is a real problem with seed. Over the years planters have stopped collecting seed and just planted the cheaper hybrids. The old seed varieties are only maintained by a few people and for most growers it is difficult to get nowadays.
Hi Bob,
An idea/realization hit me last week, and I've been waiting to run it by you. It appears to me that we already have a system that centrally collects human waste streams--Sewage Treatment Plants, and that with some modification they could collect the nutrients they try so hard to wash out of the water they're suspended in. Are there any Waste Management engineers reading TOD?
Whatayathink Bob?
They are already doing this. Last week I watched the Fertilizer episode of "Modern Marvels" and there are sewage plants that do this. They separate the solids, add some bacteria, let it mulch, and sell it as fertilizer.
Disclosure: I am not Bob.
But there is a problem with your idea. The stuff that goes down our drains is not just bodily excreta. There are all kinds of household chemicals, heavy metals, pharmeceuticals, soaps/shampoos/cosmetics. All kinds of lovely bioactive estrogenic crap. Etc.
I would never put anything from a sewage treatment plant on my land, period. We're just not set up for it.
never put anything from a sewage treatment plant on my land
That used to be Milwaukee's Milorginate recommendation - do not use on food crop.
Now they say its OK. Your mileage will vary.
In addition, you are adding energy to the process in the form of:
1) Processed drinkable water moved to your home
2) moving water+waste to processing
3) handling the water+waste - where eventually you have to allow the material to settle out
4) de-watering the settled out matter
Now, it used to be that man handled their own waste via an outhouse. Today it could be done with say 2 machines like the naturesmill. Or other methods documented in the book on humanure.
Yeah, I thought about all that other crap as I was writing, and afterwards remembered the book Toxic Sludge is Good For You. Oh well, I was trying to come up with a use for a system already in place. I was thinking about the mandating of composting toilets, and how it would be easier to use the system already in place. Sigh....
"Sigh" is right, karlof1. That's my take on a lot of things :-)
We are just not set up for real recycling, either of human waste or industrial waste or consumer waste. The fact that I'm even calling it waste is revealing.
I'm thinking that real recycling has to be designed in right at the start, right from the, um, manufacturing stage.
The notion of closing that circle is the right idea, but we're just not set up for it...
Yep. This should be another Manhattan Project sized push, but Alas! Pooh and sewerage isn't as exciting to think and talk about as cars :)
Hello Bob,
I'm sure you saw this article about phosphorus consumption and the potential troubles ahead. Although the topic is out of most peoples vision, it seems certain to have large influence on our global survivability for the future. I suggest you continue your efforts to bring better understanding of this topic to the masses.
It looks like the average WTI spot price for the first three weeks of June was around $134.
It looks like retail gasoline prices are currently about one dollar per gallon more than the spot price of crude per gallon. So, at $284 per barrel, we would presumably see gasoline prices of about $7.80 per gallon, which is less than the current price in Europe. But consider what an oil price increase like this would do to food prices.
Have I mentioned ELP in the last 30 seconds?
ELP Plan (April, 2007)
http://graphoilogy.blogspot.com/2007/04/elp-plan-economize-localize-prod...
Expect to see more stories like the one from Circuit City last year. From the ELP article:
Agreed. Here in the West we are moving from a world of cheap resources and expensive labor to one of expensive resources and cheap labor.
In the East they are moving from cheap resources and cheap labor to expensive resources and even cheaper labor.
Either way, we need to reconstruct our economy to minimize the capital required for projects and maximize the people required. Right now we are willing to spend millions more to purchase highly advanced machinery that takes people out of the equation. This will no longer work going forward because capital will become scarce and it will be in our collective interest to employ as many people as possible.
-André
www.PostPeakLiving.com
For the time being anyway, here in Western Canada we can't get enough workers. Of course, we don't need many senior Circuit City people, but there are continuous job fairs and recruitment events. (And that action by the company sucks for many reasons. So tell me folks, how is the American Dream comin' along these days?)
Will the vastly unemployed, fiat currency deprived (or over inflated) Americans become our Mexicans? Ohhh, this doesn't go over too well in the land of the free and the home of the brave (on credit mind you). But think about it, think your reaction to the insinuation and the possibilities?
That's the part that hurts. Now Peak Oil is starting to get a visceral feel.
Circuit City may not be the best example. When they did that they discovered that some of those highly paid people had earned their raises. Those were the ones who didn't have to take the pay cut. CC took a big profit hit, followed by a big stock price hit.
From Drudge:
http://www.jsonline.com/watch/?watch=1&date=6/23/2008&id=42044
An oil well is a hole in the ground owned by a liar...and, it doesn't matter what nationality the hole is.
Sir, I am personally offended by what you have posted. I will expect an apology.