Andrew

I have much the same misgivings

If we look, for instance, at Mexico - the poster-child ELM example, we can see that:
1) exports are falling off a cliff
2) the Mexican economy, heavily dependent on these exports for the delivery of hard currency earnings, is about to succumb to chaos, because their revenues are also falling off the same cliff.

There's no way that the Mexican economy will sustain real growth, year-on-year, that will ensure its oil consumption will grow at 5% plus p.a. It's ignoring the feedback loops, just like the way most of us (myself included) ignored the the feedback loops that led to the collapse in oil prices, following the run-up to July 2008.

Full respect to the excellent work of Brown+Foucher, but I feel it needs a further level of refinement to be really industrial-quality. The extrapolations out to 2025 just aren't credible - the feedback loops will kick in long before that, resulting in a world of complexity and chaos, long before those dates are reached, and rendering the predictions meaningless.

Regards Chris

I proposed the simplistic little ELM to help me understand the math behind net export declines. I stipulated the following: -5%/year rate of decline in production and a +2.5%/year rate of increase in consumption, with consumption equal to half of production at final peak. Net exports went to zero in nine years, showing an accelerating rate of decline in net exports, versus a constant exponential production decline rate.

We (Foucher & Brown) then compared the ELM to two real life case histories--the UK, with virtually no increase in consumption, and Indonesia, with increasing consumption. All three case histories showed accelerating net export decline rates (note that a constant 5% per year decline would show up on this plot as a line at -5%, parallel to the horizontal axis):

This is really the heart of the Export Land Model--an expectation of a long term accelerating net export decline rate versus a (generally) low single digit production decline rate (with, e.g. Indonesia, or without, e.g. the UK, rising domestic consumption).

And again when discussing supply/demand concepts, it helps to look at real numbers. For example, I estimate that for Mexico to maintain constant net exports of about one mbpd, at their current production decline rate they would have to cut consumption in half in about six years. Also, Indonesia--a founding member of OPEC--went from their final production peak to net importer status at oil prices below $40 per barrel.