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72 comments on Oil Shocks, A Pessimistic View

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louGrinzo on December 9, 2005 - 9:46pm Permalink | Subthread | Parent | Comments top
Probably the only thing worse than forgetting Murphy's Law and/or history's lessons, is assuming things will always be as they are now.

Imagine how people within the US felt during the worst of the Civil War or the Great Depression or WW II.  Or how Londoners felt during Hitler's nightly rocket attacks.  Or how Germans felt after Dresden was fire bombed.  Or how the Japanese felt after Hiroshima and Nagasaki.

The US has indeed gotten supremely stupid in its foreign relations, in terms of both energy and non-energy issues, for many decades.  In my opinion, only a fool would argue otherwise.  But I see no reason to believe that we've already reached our nation-wide level of peak intelligence (or common sense or ...).

Look at the policy reversals we've seen going from Clinton to Bush 43.  Who's to say that pendulum only swings one way?  I'm sure as hell not prepared to make that pronouncement.

Our collective energy and environmental future is going to be extremely challenging, and there will be plenty of unpleasant surprises along the way.  But there will also be some amazing breakthroughs and displays of human resilience, flexibility, and determination.

Honestly, I think that anyone, from any part of the pessimism scale, from flaming apocalypticon to brain-dead peak-oil denier, who claims to know how this will all play out is kidding him/herself and everyone else.

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Agric on December 9, 2005 - 10:01pm Permalink | Subthread | Parent | Comments top
Good points, louGrinzo. "Imagine how people ... felt during the worst..."

The truth is, if we haven't lived through them (or very similar) we can't really know what it's like. Thereby hangs a problem: most of us can't imagine how bad things may get and what that would be like. Life has been too relatively easy these last 60 years for most people in many developed countries.

But even in the darkest days there are moments and times of joy and happiness. For most of us there is a tomorrow and the chance that it will be better than today. If you have any friends or relatives who lived through the 1930s or similar difficulties now might be a good time to talk with them about it.  

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joule on December 9, 2005 - 10:09pm Permalink | Subthread | Parent | Comments top
Well said!  The future is unknowable, and anybody who says otherwise is either a fool or a charlatan, or both.

Also, one should never say that 'Such and such could never happen because no reasonable or moral person would do such a thing.."; because, as you implied, history is replete with examples of the unthinkable becoming reality.

Only through the greatest of steady efforts can we hold back the relentless tendendency towards chaos.

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step back on December 9, 2005 - 11:44pm Permalink | Subthread | Parent | Comments top
The future is unknowable,

The future is unknowable because each of us can change it.
Now go out there and build your windmill.
Hook it to your grid.
Hook your hybrid to the grid.
Hook your grid to someone else's grid.
Build an Inter-grid-net.

(BTW, make it distributed DC at 120 Volts residential
[120 = 1 x 2 x 3 x 4 x 5])

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SaturnV on December 10, 2005 - 3:13am Permalink | Subthread | Parent | Comments top
Only through the greatest of steady efforts can we hold back the relentless tendency towards chaos...
Well this is the problem entirely isn't it?  I believe it's called entropy.  Our societies are now so complex and interdependent, so strung out on cheap fossil fuels and the quick fix that they cannot be made simpler, either by accident or design, without causing their collapse in the first place.  It is only a matter of time before this happens, entropy cannot run backwards.  Of course this does not necessarily mean the wholesale destruction of man and his cradle.  However it does imply the end of our conceited belief that we could prevail over the earth and transgress its limits.

Although I agree that we cannot know the specifics of the future it is also absurd to believe that we cannot make reasonable assumptions about what the future may hold for the human race based on the existing and interrelated global trends of global warming, oil depletion, biosphere destruction, overpopulation and energy-related conflict.  Because of these and other trends, our societies are increasingly becoming unsustainable and are being run by unsustainable economic systems.  

The catalyst for collapse will probably be when the price of a barrel of oil enters the $100 - $150 range.  This price band will probably occur ahead of any eventual oil peak because of the high energy inputs that will be necessary to produce the ever increasing amounts of energy our societies require as the quantity of cheap oil decreases.  Based on the aggressive price performance of oil since 2002, and the questionable nature of stated oil reserves, one might reasonably conclude that we should reach this point sometime around 2008-9.  This will cause economic recession worldwide, and the steadily ratcheting up of the price band will succeed in stopping any chance of sustained economic recovery in future.  When this occurs, the Great Energy Depression of the twenty-first century will have begun, and the unwinding of the industrial era commenced, probably around 2012.

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Agric on December 10, 2005 - 7:51am Permalink | Subthread | Parent | Comments top
Just a quick response to SaturnV and some to Halfin's later post...

The oil price has increased at over 30% annually for 3 years, a straight line projection might hit $100 next year, so your 2012 may be 5 years tardy.

But many very smart minds and huge amounts of resource have been thrown at modelling and predicting the markets without much success. The Fed seem to have have concluded that the best way to predict the markets is to print lots of money and manipulate them ;)

How I expect peak oil to become apparent...

With a bang or with a whimper?

The bang will be obvious. The whimper will be harder to spot so I'll give you some clues...

This is how I expect peak oil to announce itself to the world unless some major geopolitical supply disruption occurs:

  1. Oil supply remains tight, just about meeting demand as perceived by the USA, occasional minor disruptions like hurricanes and demand peaks due to cold or hot weather bumping the price up and up, never quite falling back to previous levels.

  2. After a year or so of this there will be excuses of delayed projects causing temporary supply constraints, prices continue to bump up, now above $100 bbl.

  3. Another year and supply is getting still tighter, price is forced up beyond $200 bbl, excuses won't wash - $10 gas in USA getting hard to ignore, some major world leader says "Peak oil is here" and we must ration oil.

  4. sounds kinda familiar, don't it? Expect 2. to become apparent in 2006, and 3. to follow in 2007 or 2008.

What I really expect to happen is stages 1 and 2 of the whimper, then the bang. Best guess for that: October 2007 give or take a year.

If peak oil isn't just about happening you can expect the price of oil to drop back below $50 by mid 2006 and stay there for several years as new supply comes online without being offset by even greater declines in existing production.

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mcain6925 on December 10, 2005 - 2:24pm Permalink | Subthread | Parent | Comments top
I'm much more inclined to go along with Henry Groppe's ASPO Conference presentation. His bunch try hard to account for both the supply and demand side of the equation on a world-wide basis, and believe that sustained prices at $60/bbl will flatten world demand for petroleum. They forecast that much of the demand destruction will occur outside the developed economies -- for example, that developing countries will shift from oil to anything else they can get for generating electricity, mirroring the changes that the developed countries made after the oil shocks in the 1970s. Certainly a spike to $100/bbl will cause some decreased demand in the US, but will cause much greater decreases (on a percentage basis) in poorer countries. The US is the largest consumer, but in general, is not the marginal consumer. Given the present trade situation, and so long as oil is priced in dollars, China is also not the marginal consumer.

My own scenario for a US oil crisis is this: the US federal deficit is still running >$400B/yr in 2008 (>$600B if the Social Security accounting gimmicks are excluded), the Republicans win the White House promising further tax cuts, OPEC decides that dollars are a bad risk and (having converted a goodly portion of their petrodollars) announces that in the future they will price oil in euros. By 2010 oil is indeed priced at >$120/bbl, but most of the pain is confined to the US and China. Mike

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Engineer-Poet on December 10, 2005 - 7:48pm Permalink | Subthread | Parent | Comments top
Our societies are now so complex and interdependent, so strung out on cheap fossil fuels and the quick fix that they cannot be made simpler, either by accident or design, without causing their collapse in the first place.
Where's your support for that claim?  If you cut the need for e.g. motor fuel in half over a few years with efficiency or substitutes, the only thing to collapse would be the stock prices of the oil companies.
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SaturnV on December 11, 2005 - 7:44pm Permalink | Subthread | Parent | Comments top
I guess that's were we differ you see peak oil as a problem in isolation whereas I look at it from a systemic viewpoint.  What you call efficency and conservation others will call job cuts and declines in living standards.  So you don't believe that competitors that have now evolved as peers in a globalised economy will not suffer the same fate when economic contraction begins as a result of peak oil?  As for the quick fix.  One local example is the NSW state government of Australia, in an attempt to do something about increasing car usage and congestion of Sydney's roads since presiding over the run down of its heavy rail system, has built toll roads that will require at least 25 years to make a profit when it's obvious even now (cost driven driver backlash, switch to alternative and unsuitable suburban routes etc) that vehicle numbers will not be available in future because of peak oil to support this infrastructure rather than spend the money on restoring rail.  These are truly roads to nowhere...http://sydneypeakoil.com/matt/100NewOilFields3of3.pdf

And your not honestly arguing, despite all evidence to the contrary, that alternatives are going to replace the exponentially rising shortfall of the concentrated energy density and richness of sweet light crude in anywhere near the volumes necessary to satisfy current and future global demand, or that price for such energy dispersed substitutes will not become even more enormously expensive than they already are once that cheap oil subsidy starts to decline.  Or that any of this will not impact on the complexity of our societies leading to instability?

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Engineer-Poet on December 12, 2005 - 1:01am Permalink | Subthread | Parent | Comments top
I guess that's were we differ you see peak oil as a problem in isolation whereas I look at it from a systemic viewpoint.  
Don't flatter yourself.  I've been looking at this issue from domestic issues to geopolitics to farm policy to pollution control, in public, for almost two years.

I've been thinking about plug-in hybrid vehicles for nearly fourteen years now (the first thought I can document is early 1992).

What you call efficency and conservation others will call job cuts and declines in living standards.
You seem to be confusing "efficiency" and "doing without".

I call "efficiency" a doubling of vehicle MPG through better powerplants and careful attention to aerodynamics.  I still call it efficiency when we switch to battery-driven vehicles so we can burn oil in 60%-efficient combined-cycle gas turbines instead of 20%-efficient piston engines and get almost 3 times as much out of our hybrids.

When the electric vehicles let us use wind turbines or PV panels to make "motor fuel", I call that alternatives.

So you don't believe that competitors that have now evolved as peers in a globalised economy will not suffer the same fate when economic contraction begins as a result of peak oil?
You poor fool.  Did the world economy contract when the PC was cloned and IBM's profit margins on the product they standardized fell to the point they got out of the business?  No, the computer business grew like crazy!

What I'm saying is that the oil companies are in no way essential to the world beyond the current lack of substitutes for their products.  If you find a way to do the same job on half the gasoline, kerosene or LPG, you are not going to contract the economy.  Quite the opposite.  And if you find a way to eliminate the need for petroleum altogether, the greater the economic advantage you will have as the cost of oil rises.

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SaturnV on December 12, 2005 - 2:04am Permalink | Subthread | Parent | Comments top
Don't flatter yourself.  I've been looking at this issue from domestic issues to geopolitics to farm policy to pollution control, in public, for almost two years.
Yeah, well I've been thinking about them for 5...and studying them for 10.  So we're about equal right.

You seem to be confusing "efficiency" and "doing without".
No I believe I've got it right.  The efficiencies you call for will result in job cuts because there will be less "waste" to move around from production to disposal.

When the electric vehicles let us use wind turbines or PV panels to make "motor fuel", I call that alternatives.
I think you're dreaming.  Apart from the incredible lead time required for all of this to happen, not to mention the expense involved, the world seems to be heading towards coal-fired stations again as an answer to hydrocarbon depletion not some "clean green" capitalist utopia as you envision.  Besides the oil companies will want to be able to sell us some other liquid to fuel things to continue making the "big bucks".

You poor fool.  Did the world economy contract when the PC was cloned and IBM's profit margins on the product they standardized fell to the point they got out of the business?  No, the computer business grew like crazy!
How can you compare oil's importance to the economy with the computer when everything rests on the former - inlcuding the development of the PC?  My standard of living can survive without me personally having a PC, but can't if cheap oil isn't available for me to get me to work or to the shops, or if it can no longer afford me a job so as to buy the stuff that was manufactured and shipped to them in the first place using the same cheap oil.

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Engineer-Poet on December 12, 2005 - 11:28am Permalink | Subthread | Parent | Comments top
No I believe I've got it right.  The efficiencies you call for will result in job cuts because there will be less "waste" to move around from production to disposal.
That is the most confused piece of nonsense I've seen in the last week (aside from the IDiots posting over at The Panda's Thumb).

You imply that waste heat from vehicles produces more economic value than the work the vehicles do.  If you've been studying this for ten years, you ought to be able to explain this in math terms (no hand-waving) and back it up with at least two examples.  I will bet $1000 that you can't do it.

the world seems to be heading towards coal-fired stations again as an answer to hydrocarbon depletion...
The world is doing both.  The US will install about 2.5 GW of wind capacity this year, raising the total capacity by 35% in just one year.  We need more like 25 GW/year for a few decades, but this is a lot closer than it looks.  If turbine production increases 35%/year we'd get to 25 GW/year in mid-2013.
Besides the oil companies will want to be able to sell us some other liquid to fuel things to continue making the "big bucks".
Are you required to buy it?  The more "big bucks" it costs, the more attractive efficiency and alternatives will be.  You can make a plug-in Prius today, and sooner or later one of the  hybrid manufacturers is going to offer it as a factory option.
How can you compare oil's importance to the economy with the computer when everything rests on the former
"Everything" does NOT rest on oil, mostly the transport sector.  If the transport sector suddenly needed half as much oil, the rest of the economy would grow.  Same for the rest; you can make just about any kind of petrochemical from syngas, and you can make syngas from oil, coal, natural gas or biomass.  Running the economy on coal is possible (though ecologically disastrous), and it would make little difference to the rest of the economy if the coal companies took over and Big Oil dried up and blew away.
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coffee17 on December 10, 2005 - 10:07am Permalink | Subthread | Parent | Comments top
If the choice were between two people, one who points out that the chocolate ration has risen to 30g recently under his brother's rule and if he's elected he'll increase (queue standing ovation) the chocolate ration to 25g the first week he's in office. Note that I said "to" and not "by" when referring to the ration's increase. The second person says that chocolate production is in decline, and the quality of America's chocolate is abysmal (note the lack of applause). We'll have to reduce our chocolate ration to 27g and there might be further reductions after that; America needs to rethink it's chocolate consumerism.

I know who I'd be voting for (3rd party! ;). However, I've met too many people who'd vote for the former. He uses terms like increase when that's not what it is, says that things are great (he's not a nay sayer!), and that they'll only get better. The other says that we need a change. A change? Change is to be feared. Change means that things aren't rosy right now... I don't think that the president should be such a pesimist.

Perhaps I've been reading too much wisdom from Step Back's Lemming institute.

Regardless, from what I've seen of the two major parties, while one might offer slightly better leadership than the other (I won't name names for sake of political flames) regarding peak oil, I think it would only be slightly better at best. Both US and Canada need to pick up their heads and actually try to start thinking long term. Canada's having yearly elections, and thus is legislating to try and keep their polls up at all times, with wolves ready to snap at their heels. The US is increasingly being run like a corporation; big awards to the BoD, small short term gains for the share holders ($300 tax refund), and the only "long term" planning is the assumption that things will be tomorrow pretty much as they are today so keep the party going.

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