Open Thread
Posted by Stuart Staniford on November 18, 2005 - 1:43pm
Topic: Miscellaneous
Tags: gas prices, hubbert peak, oil prices, peak oil [list all tags]
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116 comments on Open Thread
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http://www.peakoil.com/fortopic14939-15.html
Mainstream scientists simply don't have the time to shoot down every fringe idea that is out there. We all live in a world where people have finite amounts of time. We all have things we like to do when we are away from the office, and for most of us, shooting down these things isn't entertaining.
If these people want mainstream scientists to take this theory seriously then they need to start convincing them one by one. And I will admit that going into it, there will be a natural inclination to dismiss the theory without serious consideration. In my business we call it "flipping the bozo bit" - meaning that once you conclude that someone is a bozo, there is a tendancy to filter out and ignore anything that person has to say.
There have been times in history when the radical new theory turns out to be correct. When I was in graduate school, I had a professor who when he was a student had to study quantum mechanics in the math department because quantum mechanics was considered too controversial. Oftentimes what happens though is that for the radical new idea to gain a foothold, the adherents of the new theory need to convince someone who is well known and respected in the field. Once this happens, there is a tendancy for people to sit up and take notice and think to themselves "perhaps there is something to this after all". Another avenue is that the new idea is picked up by new people entering the field, and the old ideas die out when the older folks die out.
At one point cold-fusion was in the 'bozo' category, but some have kept poking away at it, and it appears that there might be something to it. Don't get your hopes up though - the amounts of energy are extremely small - it is more at the level of an interesting physical phenomenon.
Getting back to abiotic oil, instead of waiting for the mainstream to come in and prove that they are idiots, it is upon them to come here (or somewhere where the mainstream view is held) and convince someone who is known and respected in the field that they are not. If they manage to do this, then the rest of us might say that it is worth a 2nd look.
My own personal view is colored by the fact that I am not trained as a geologist - thus I am initially inclined to defer to the mainstream view. And regarding Corsi's book in particular, I don't want to give that SOB a dime of my own money, thank you very much, so there is no way in hell I am going to buy the thing. I have flipped a few more bits than just the bozo bit for Corsi, and most of these bits have names that couldn't be printed in a family newspaper.
By the way, I wasn't really suggesting the piece on the history and science of oil exploration as a direct response to these guys, but as an educational piece like the kind we get each week on the technology of drilling. It would have, however, the beneficial side effect of giving us ammunition to counter our own close friends and relatives if they try to pull this abiotic oil garbage on us over Thanksgiving or elsewhere.
For now, Corsi is no more credible than whackos who believe in astrology. He is responsible for proving his crazy theories, not the rest of the world.
Perhaps the Corsian response would be that the abiotic oil is so deep that until recently we didn't have the capability of finding it, which would also burden abiotic proponents with explaining why these deep abiotic deposits don't migrate closer to the surface over billions of years.
The truth is that I wouldn't be surprised if abiotic processes generate trace amounts of hydrocarbons. But I favor occasionally poking at the obvious holes in the Corsians argument but ultimately letting them come to us - if abiotic oil will save us from the peak, where is it? Just find one 100 million barrel field in basalt with no sedimentary source rock beneath it and we'll let him sit with the grown-ups. No Mr. Corsi, deepwater Brazil doesn't qualify.
Of course, now you'd be hard-pressed to find a scientist who doesn't believe in plate tectonics. Gould says what made the difference was that someone finally came up with a mechanism.
He used to use that as example of how scientists will come around, no matter how wild the idea is, if there is actual evidence.
Scientists don't like assertions where "and here is where the miracle occurs" is someplace in them, but the continent outlines and the fossils and the rock magnetism said that something was there to be explained and we didn't have an explanation till then.
There was a similar problem in evaporite deposits. Until Snowball Earth there was no statistically meaningful way you could explain the anhydrite problem, and there were about a dozen others. Salt deposit explantations ranged from the statistically impossible to the absurd. But it's still the received wisdom in evaporites.
Hmm, I had forgotten that they had made this claim.
The problem is that to a lay-person this idea would sound plausible. And very few people take physics these days, so this won't raise red flags for very many people.
http://www.worldoil.com/magazine/MAGAZINE_DETAIL.asp?ART_ID=2696&MONTH_YEAR=Oct-2005
"The venerable bell curve appears to have a sharp, unseen crest."
Robert L. Hirsch claims that advanced technology and high prices have little effect on the shape of the curve.
The data shows that the onset of peaking can occur quite suddenly, peaks can be very sharp, and post-peak production declines can be comparatively steep (3 - 13%). Thus, if historical patterns are appropriate indicators, the task of planning for and managing world conventional oil peaking will indeed be very challenging.
The North American natural gas peak caught the energy industry by surprise. And that was with modern technology, and access to a lot more information than we'll ever get from most OPEC countires.
This is a link Congressman Murtha's recent (It is time to bring the troops home) speech regarding the War in Iraq. In his speech, he noted that Iraqi oil production is below the pre-invasion levels.
Murtha has very close ties to the Pentagon and to military families. The prevailing opinion is that Murtha is speaking out because he believes that: (1) a majority of senior military officers have turned against the war and (2) a majority of military families have turned against the war.
Of course the officers especially can't speak out, and even if military families speak out, it could have negative consequences for their family member's career in the military.
But even with what we might or might not do with our troops, IRAQ'S oil is not going to be on line for many years to come.
We leave today, civil war and chaos.
We don't leave today, civil war and chaos.
I am afraid we have only one option.
Civil War and Chaos.
To be honest I'd rather to move the troops out of harms way. Bring them back, Cure the wounds, prepare for the next battle for oil.
When? Where? Your guess is as good or better than mine, but there will be one very soon!!
1 - If the US leaves Irak now, there's the rest of the world to help Irak rebuilding itself in a honest and more effective way. Everybody knows that the US presence there is the major source of tension. Irak will not be allowed to fall into complete chaos when the US retreats. The problem is the unilateral way of doing things over there (the coalition force is not a multilateral force, just look a the number of troops per foreign country stationed on Irak).
2- there's no need to go to war for resources. We now should know better, develop a true globalization (not purely capitalistic, but humanistic) and gradually abandon the notion of national state when we talk about politics. Because we found out that we all live in a single planet (animals, plants, etc), it is fair to share resources equally well and try to elevate ourselves beyond the "law of the jungle". We need to cooperate and develop global political projects that embrace the whole humanity.
A first step is given at Simultaneous Policiy
I don't know how realistic they are but it's a (first?) attempt to get to a world democracy, beyond narrow national borders.
1 - If the US leaves Irak now, there's the rest of the world to help Irak rebuilding itself in a honest and more effective way. Everybody knows that the US presence there is the major source of tension. Irak will not be allowed to fall into complete chaos when the US retreats. The problem is the unilateral way of doing things over there (the coalition force is not a multilateral force, just look a the number of troops per foreign country stationed on Irak).
2- there's no need to go to war for resources. We now should know better, develop a true globalization (not purely capitalistic, but humanistic) and gradually abandon the notion of national state when we talk about politics. Because we found out that we all live in a single planet (animals, plants, etc), it is fair to share resources equally well and try to elevate ourselves beyond the "law of the jungle". We need to cooperate and develop global political projects that embrace the whole humanity.
A first step is given at Simultaneous Policiy
I don't know how realistic they are but it's a (first?) attempt to get to a world democracy, beyond narrow national borders.
Given the weekend is coming and Stuart's analysis of 8% decline keeps you awake at night.
Here is something to make to have a good ol laugh.
http://www.smh.com.au/news/business/higher-oil-output-to-push-down-petrol-price/2005/11/18/113201698 7201.html
PS Substitute Gas for petrol
"Price" is a vocal valuation that we humans make. It is a noise and nothing more.
Consider for example, the tulip bubble. At some point, people were buying flower bulbs for the "price" of a house!!
In contemporary terms, one day a tulip was priced at $100,000 per bulb and a slightly different time later, the Intelligently Designed "Markets" were "pricing" the bulbs at close to $0. And that is for a biotically renewable commodity.
So how reliable are Market "Prices" for telling us what is going on in the short term? Not too. (Not tulip --couldn't resist.)
BTW --at this tool-ip moment, crude has crossed back up above $57 per bulb
The problems are in the market imperfections which in reality stretch much further than price bubbles etc. Markets are made of humans not of all-knowing rational computers no matter what the economists say. The responsibility to counter the imperfections of the short-sighted individual decision that govern markets, is of the society contract called government. At least in theory it should handle those beauties that our unrestricted capitalism causes:
- Social inequality and exploitation
- Environmental degradation
- Resource depletion
- Loss of community favorable values (moral, laws) in favor of egoistic individualism
- Flourishing of senseless and soulless consumerism
- Total alienation and apathy, loss of critical thinking
- etc. etc....
You fill the dots, the list can go on for ever. In short if we want to have a future we'd rather work in the direction of a new (sustainable) society contract and a new living arrangement. The markets as an institution should most probably remain.The oil market is a very complex system with strong negative reinforcing trends: high prices generally depress consumption and encourge production growth and vice versa. Typically I'd expect deep price cycles for a commodity that has such a direct connection to economic activity with a lot of seasonality and random events thrown in, and I don't see a good reason why the cyclic and random features should dissapear just because the peak is near. What surprises me is that the price increase for oil in the last five years has been relatively steady. What I expect is that as we approach and pass through the peak price fluctuations will increase in magnitude and cycle highs and lows will get progressively higher.
Ultimately the price for oil should theoretically stabilize at a new level determined by the price of what becomes the dominant substitute for oil. Since this substitution (which in this case requires a complete overhaul of our transportation infrastructure and significant changes in behavior) is difficult to make in time and resources I also expect that oil prices will peak far in excess of the long term depletion price at the mid-point of the transition period.
Take the domestic peak in oil production as an example: we substituted foriegn oil for our domestic supplies with a significant increase in longer term prices, but with some very significant peaks and troughs in the decade after the peak. Only this time the substitute is not so obvious or easy.
If the economic fallout of peak oil is severe enough, who knows, perhaps the end price will end up lower than now. For examples, we might imagine that the survivors of the collapse might lose the technical capacity to make internal combustion engines and those who are left can start complaining about the high price of hay.
Story from BBC NEWS
Uh, why exactly? Doesn't this seem a little off?
Personally I think that on-line trade can have more survival chances if it grows more and if it benefits from a dedicated delivery network (cheaper and faster delivery). Sure it depends on the lifestyle, or on the items traded but it has often been the case that I've spent almost as much on fuel for going around than the value of the item (provided that I need the item immediately and I can not wait for it to come from an on-line store). If fuel costs rise sharply then this type of shopping would have to most probably change, but so will the shipping charges over the internet. How do you think?
Really, though, I'd like to take this opportunity to get on my soapbox about the current absurdity of Digital Content Delivery (DCD). Right now, there is little to no incentive to choose DCD over conventional methods of content delivery. Digital books often cost as much as their print counterparts, despite what MUST be vastly decreased costs from the publisher. They need vastly decreased prices to give one an incentive to put up with the inconvenience of reading an entire book on a screen. I have read plenty, and my enthusiasm for screens vs. paper has dimmed considerably since my first foray.
Games are the same way. Developers like Valve allow for DCD for their games, yet they destroy incentive by introducing artificial restrictions like simultaneous release dates (locking the software download so you can't play it until the boxed product is in retail stores) and equivalent pricing. DCD developers need to start building incentives into their products if they want them to take off, in my opinion. On the other hand, maybe increasing transportation costs will provide more impetus for DCD to stay at similar price points to current retail products.
I think this closes the discussion... maybe if some large corporation finds a way to organise delivery so that it benefits from economies of scale this could change but still it would be hard to arrange those variable shipments effectively.
If I were to bet on some kind of reatail in future it would be on small to middle size local stores.
When I was a kid, we often lived in very rural areas. (My dad's an agronomist.) UPS didn't come to our street. Even the US Postal Service wouldn't deliver door-to-door that far out in the boonies. Instead, people had mailboxes in a central location that the PO would deliver to (often at "junctions" - places where major roads intersected the highway). Many used PO boxes instead.
This does save energy, because even if you have to drive to check your mail, you don't have to check your mailbox or PO box every day. And you don't have to make a special trip; you can combine errands. Your neighbors can bring you your mail when they go to check theirs. My family usually used my dad's work address. A secretary would check the PO box every day, and my dad would bring the mail home to us.
However, having said that, the far more important consideration in the long run is to increase the density of neighborhoods. A densely populated neighborhood can support local shops and make it possible for customers to walk to shops. Densely populated neighborhoods also make bicycle delivery schemes practical.
Perhaps was just ahead of its time.
I have friends that live several miles from a store, they use a car, one big circle all their needs met.
Doctors don't and can't make house visits, Unless you pay them a lot of money.
Schools have to move closer to kids, or kids closer to schools.
HEY I don't have a computer!! HEY WORLD!! GIVE ME ONE I WON"T DRIVE HONEST!!
Will you see an end in sight to the GIVE ME's you will get from that thinking???
http://stockcharts.com/def/servlet/SC.web?c=$WTIC,uu[w,a]daclyyay[df][pb50!b200][vc60][iUb14!La12,26,9]&pref=G
this goes back 3 yrs. if you hit the annotate button you can play technical analysis. using the cursor connect the bottom in october 2003 and continuing all the way to the right side of the chart , going through the january, 2005 bottom. draw a second line starting at the jun 12, 2003 top , running to the right connecting with the april 5, 2005 top and proceeding all the way to the right, basically parallel to the bottoms line. this defines the oil bull market to date. notice the irrational exhuberance of october 2004 and the crescendo at the end of august , 2005 where are we now? at the absolute bottom of the channel, which is currently ~ $56.60 ...todays current price
http://www.bloomberg.com/energy/
i get $56.14.. this bears watching...did i say that? i get the feeling that oil is coming on the market from every direction..SPR ,EIA, saudi overproduction or tank farms? your guess..but i feel like the price is being pushed down.
I think what is happening is something of a delayed reaction to the problems caused by the hurricanes. Everything was blown to hell and so they started a lot of programs to get more oil and gasoline into the market. These aren't really needed so much any more but there is always a lag in matters like these.
This is an important point in understanding Peak Oil as well. There is always a delay in the reaction. I think we are still seeing a reaction even now to the 20 year fall in oil prices from 1980 to 1999. This hurt the industry, it cut back on the number of rigs available, a lot of people and companies left the business.
Now, the financial incentives have changed, particularly in the last year or two. But again there will be a lag. We constantly read here about shortages of drilling rigs, fields declining without new ones coming on line, and so on. But I really think that much of this is due to the bad conditions through the 90s which caused under-investment.
The point is that this is about to change. Over the next few years the oil industry will see a rebirth. The rig shortages we face today will turn into rig surpluses in a few years. The market will be flooded with drilling rigs, people will be poking holes into the ground all over the world. We will see an enormous investment in oil production over the next five or more years. Engineers will crowd into the field and it will become one of the hottest areas for hiring. This is the inevitable effect of today's high prices.
There are a couple of possible outcomes. It could be that this will take too long to have any effect and we will see a crunch where demand doesn't meet supply for the next couple of years, especially if Stuart's 8% graph comes true (which I am skeptical about). Or it could be that this resurgence of productive effort will have enough short term effects to take care of any shortfalls.
When analyzing oil supply, or any similar situation, keep in mind the long lead times between cause and effect. It often sheds light on what is happening and what will happen.
I also agree with your comments about lags. I think these major projects analyses get pretty uncertain after 2008, because we are seeing project commitments with first oil plans by 2008 now (eg Chevron has committed to Blind Faith and Tahiti in the last couple of months, both planned for first oil in 2008 (which will start to materially affect the numbers in 2009). The majors do have a pretty significant inventory of uncommitted discoveries they could bring on in principle. I think the question is by the time the industry can ramp up its size to start more projects, and by the time those projects produce significant flows (3-4 years later), how much decline will have happened in the meantime, and will there be any hope of restoring production above peak level?
What we know from experience with other peaks (eg Texas in the 1970s, or North American natural gas now), is the peak is distinguished from other peturbations by the fact that although the effort is increased and increased, it cannot keep up with the declines.
According to the U.S. energy bill passed last summer, the U.S. SPR will not only be refilled with the borrowed petroleum, but an additional 300 million barrels of crude will be added (most likely in the form of in-kind mineral lease payments). So there is a built in large demand waiting after the current international SPR drawdown is complete. Plus the Chinese (and possibly the Indians) must begin filling there own SPRs given the recent vivid usefulness of a Strategic Petroleum Reserve in the face of natural disaster. It's really no surprise that the December light crude oil contract is in a bearish down wave, with the assumption that demand is substantially inelastic - a little bit of extra post-Katrina/Rita supply from the SPRs and the price drops like a rock. But what puzzles me is why the out-year contracts are also dropping. Don't the traders see the fundamentals as we see them?
No they don't. I opened a futures account this week in response to this price anomaly. I have purchased a $62.50 March 2006 (expires mid.Feb-2006) call option.
Its value has already gone down, but I will be patient.
I could be wrong and crude oil trades in the $50's for a few more months, hopefully I am right and we will see oil in the $60's or even in the $70's by then.
But today if I had even some of the Capital needed I'd be planting the nest egg for my kids.
Oh yeah what kids, duh!!
Can I get payment in Solid Gold?
Peak oilers this is your time to strike it rich!!!
HONEST Bet the farm!! If you loss the world will be swimming in oil and you can start over!! If you win, You'll still have the farm and Some spending money!!
Hey its not sarcasm, honest if I had the money needed I'd be betting the sure thing too.
I figure that all the pundits espousing the "end of the oil crisis" based on falling prices in November are going to have egg on their face shortly.
I worry more about Natural Gas...
I live in Huntsville Alabama, My heater came on, even set at 50 degrees. My 2nd x-wife lives in Ohio, it was 15 last night, Southern Ohio.
Winter hit hard and fast, for us Southerns just a week ago we had 80's. NG is the heat of choice, or coal fired eletric, with a touch of nukes. We are seeing the down turn now.
Give all these prices a few more weeks. Then check back, You'll see the change real fast!!
http://news.yahoo.com/s/ap/20051118/ap_on_re_us/tropical_weather
It doesn't look like it will be directly affecting any GOM operations though; they're saying Florida may be threatened by the beginning of next week.
"Alpha children wear grey. They work much harder than we do, because they're so frightfully clever. I'm really awfully glad I'm a Beta, because I don't work so hard. And then we are much better than the Gammas and Deltas. Gammas are stupid. They all wear green, and Delta children wear khaki. Oh no, I don't want to play with Delta children. And Epsilons are still worse. They're too stupid to be able to read or write. Besides they wear black, which is such a beastly colour. I'm so glad I'm a Beta."
(The table in this Marketwatch report shows proven combined recoverable reserves for Saudi Arabia and Iran of 394 Gb. The Hubbert/Deffeyes method--which has been 100% accurate for Texas, the Lower 48, and the North Sea--gives Saudi Arabia and Iran combined recoverable reserves of 140 Gb, one third of "conventional wisdom.")
http://www.marketwatch.com/news/story.asp?page=1&guid={B012D84E-A8D4-4F03-91AD-6BBF8F37D155}&siteid=mktw
Are we there yet? Prospect of $100 oil
Longer-term bets based on high risk, depleting sources
Excerpt:
Given all that, "$100 oil is not that far off" -- in 2 to 30 months without a major terrorist act, and 6 to 12 months with a major terrorist attack, said Kerr, who also edits Global Resources Trader, a service of MarketWatch.
"The bottom line is, the light, sweet, easy-to-get/easy-to-refine oil is much harder to lay your hands on nowadays," he said, and that lack of light, sweet crude to refine "will most certainly drive prices higher overall."
So "for those asking 'are we there yet?' -- be patient. It probably won't happen in 2005, but 2006 or 2007 could be another story," First Enercast's Ameko said.
I like to be able to review a contributors previous posts before asking a question, to make sure I have all the background and am not asking the person the same question 10 others have asked on other days. I don't see how to do that here. What am I missing?
Same thing for keyword searches...it appears that only articles with the keyword in the main article can be found, not any responses.
I was specifically trying to research Freddy Hutter and his Trendlines posts to get his history here.
Am I missing something obvious? Tried regular and advanced search.
Freddy Hutter,
Went back and read your posts, looks like they started relatively recently, about the same time I started following along here.
I had a few questions, if I may be so bold...
How did you get into this trending business in the Yukon?
The graphs are interesting, but can you provide more commentary on what makes the different predictions beleivable or not? Your site provides a good bit of detail on how Campbell has been wrong in the past, not as much on the others...so I don't know what to conclude in terms of which predictions you think are more realistic, other than that Campbell is a case study in how people tend to become attached to their own predictions. The next 5-10 years seem most critical in analyzing differences, have you thought of showing that in greater detail, as this critical period kind gets a little lost in the large time-scale.
Do you receive financial support for this work, and if so, who is providing that?
At some points you seem to be advocating a soft landing, no need to panic, and at others more of a 'boy our goose is cooked if we don't change fast' view...can you clarify?
Thanks!
csprings wrote:
> Freddy Hutter,
> Went back and read your posts, looks like they started relatively recently, about the same time I started following along here.
>
> I had a few questions, if I may be so bold...
>
> How did you get into this trending business in the Yukon?
This actually started in Kitchener-Waterloo, but my spouse from Poland insisted that we move to BC and then the Yukon and here we are!! We both really enjoy the old fashioned winters here. No rain usually Nov-April. Lots of wildlife, a slow pace of life and most amenities incl big boxes in the capital, Whitehorse.
> The graphs are interesting, but can you provide more commentary on what makes the different predictions beleivable or not?
By presenting several scenarios, the purpose was not only to allow comparison, but to illustrate the areas of consensus ... not that quantity is better than quality! We commenced promoting the ASPO & Laherrère models to actually show that the end-of-the-world was not near. That oil would be around for decades to come. That message is not clear in among the merchants of fear. We wanted to give Peak Oil and Depletion some perspective.
> Your site provides a good bit of detail on how Campbell has been wrong in the past, not as much on the others...so I don't know what to conclude in terms of which predictions you think are more realistic, other than that Campbell is a case study in how people tend to become attached to their own predictions.
Unfortunately, by being one of the longest at this, his record is easiest to criticize. The likely lost point of the criticism is that as URR studies get better and as higher prices make more discoveries economic, the ever increasing URR and supply has been able to track demand for the most part. Refining capacity is the bottleneck presently, not crude supply. Updated and new models are presenting ever higher extraction targets and dates of exhaustion. On the other hand, widespread criticism is causing the "optimistic" modelers to dampen their outlook e.g. EIA & IEA. Even tho we have only been doing the Peak Oil Depletion graph two years, it (or my comments) has influenced change of some models.
> The next 5-10 years seem most critical in analyzing differences, have you thought of showing that in greater detail, as this critical period kind gets a little lost in the large time-scale.
Actually, we did have high resolution graphs to 2010. But my personal interest is especially in the very long term and we have been extending the time line. We track the monthly global production records to see if a plateau is becoming evident and hence our "past" trendline is very accurate albeit not much resolution. Frankly, even if there was a year or two of negative direction, we see that this is too short a time period to base a decision on peaking and hence the concern of resolution is rationalized. We have seen production go negative six times since 1950.
> Do you receive financial support for this work, and if so, who is providing that?
i wish!!
> At some points you seem to be advocating a soft landing, no need to panic, and at others more of a 'boy our goose is cooked if we don't change fast' view...can you clarify?
I am a proponent of soft landing via demand destruction thru pricing. Some oil dependent users will get hurt due to being accustomed to cheap oil i.e. "real" pricing over the last decade did not keep up with general inflation. Users have a false sense of pricing that finally returned to historic norms in 2004/2005. Many sectors based decisions on that cheap oil or by-products. Those vulnerable users hopefully have alternatives or can pass on new costs. But the best is if they withdraw from the marketplace. I really want to see non-essential users weened of oil wherever possible and feasible.
thanx for your questions and comments,
Freddy H>
Marsh Lake, The Yukon
p.s. - i've updated my USA Energy Reserves for November. As indicated, my forecast for the March 2006 trough in working nat'l gas has been raised from 950-Bcf to 1000-Bcf. The whole Report with graphs & stats & commentary is at http://trendlines.ca/economic.htm#USAReserves
> Thanks!
>
> csprings
If this winter is colder than normal ng prices will rise, causing some to lower thermostats. However, there may be some regression.
In the cold winter of 2002/3 some northeast schools and factories closed for a while because of high ng prices. Indeed, some factories had to close because this was a condition of their ng contracts. This meant that kids and/or workers stayed home, so their houses had to be heated. Another ploy for economically distressed schools is to stop busing students, something that happened in San Diego several years ago. This meant that parents had to a) deliver kids to school during rush hour, b) pick them up around 2pm, c) arrange for somebody to come to their house to baby sit, and d) then return to work. All of this naturally increased gasoline consumption and contributed to congestion and air pollution - and the situation has not changed! Demand destruction is not as easy as it looks.
On your Exxon post, JD brought up how much ethanol we produce globally (700,000bpd). It got me to thinking- out of the 84 million bpd the world consumes now, is there any way of calculating how much of that itself goes into energy creation? (biodiesel, drilling rigs, electricity, ethanol, windmills, photovoltaics,etc). How much of our energy use is needed to provide energy? It seems that with potentially declining EROI, we should care about the NET not the GROSS in terms of Peak Oil - what we have left after the world has used what it needs to create/refine energy. More interesting would be the historical trends of such numbers. Maybe the 'net' that is left after 'producing' the energy has already peaked?? Methinks data might be slim...Thoughts?
Most heavy Industry Metal Working and Such Depend on the Electric supply how it is powered in the given area, usually do not depend on crude oil, but the other forms of the fossil fuel chain plus Hydro and Nukes.
So rigs are in some cases are mostly built through other energy imports than just Crude oil.
A total world energy use, broken down by resource. Possible or only a pipe dream of us information junkies??
Hello Oil Drum! This is my first post here.
My little tidbit to add to the discussion. I was listening to the Valero conference call following the co's earnings announcement. The ritual occured on the 31st of October.
A few minutes into the CC, Valero Management commenced with a Q&A with the shareholder base.(Yeah right)
First person to ask management was Analyst Z from I-Bank Y.
La Dee dah dee dah.
Onward to the second analyst from I-bank G...
Most of the Q & A is dull to me, actually all of it is non essential, repeated information.
Then, out of the blue one of the Valero Corporate exec's in a rather monotone voice tells his audience that Oil supply won't meet demand, according to their projections by 2008.
30 Billion Dollar Company, Largest Refiner in the USA...I felt stunned!
The analyst bumbled something or other related to his purpose in career (money), completely missing the significance of the statement.
Sorry for my lack of details here, I last listened to the conference the 31st of October, and have forgotten most of the inconsquential features.(all except the format of the call and the peak supply call)
I must have forgot it at least 50 times but what is the BTU value of one SuperTanker filled with oil?
Assumptions:
Heating value of crude oil - roughly 18,000 BTU/lb (give or take)
Super tanker gross tonnage - 300,000 tons (some bigger; some smaller)
% oil cargo - 50%, or 150,000 tons (I'm guessing but am probably not far off)
On that basis:
BTU content of one super tanker = roughly 5.4x10^12 (5.4 trillion) BTU
Why do you ask: planning on buying a tanker load or two?
138,690 BTU per gallon$205,000,000.00 in BTU equal value in electricity per SuperTanker.I thought Supertankers carried 1 million barrels?
If they did carry 1 mil barrels then 42 mil bbls oil will carry 138690 BTU per gallon( or put in another way 138+billion BTU's per 1000000( million) gallons.YEEHHAW!!!
Or put yet another way - a KWHR of Electric flow is worth $0.15 ( ? )and that flow yields 3814 BTU's ,36+ KWHR per gallon of oil and/or 36 mil KWHR per 1,000,000 gallons x 0.15 = $ 4.9 million x 42 mil bbl ( per tanker )
Yes Folks that is a lot of GETTUS
Now let us focus on the Largest untapped reservoir of energy yet in America.
There may be 100,000,000 houses in this Country.We will use that #.Each house has about a 2,500 SF roof which if viewed thru rose colored glass looks more and more like installed solar collector to me!On a lot of days each year about 200 BTU of energy falls on each sq ft of roof per hour in the form of SunLight.500,000 btu hr x 8 (modest)hrs = 4 million btu's per house per day,or 1048 KWHRs x $0.15 = $157 per house of Electric value in that SunLight in BTUs.Or $15.7 Billion for one day's Value in SunLight falling on the Nations House Roofs each and every Sunny Day!!!!!!!!!!
Or to put it yet another way - 75 SuperTankers full of oil -Each and every Sunny Day!
Peak OIL, MEANS Peak FOOD production as well.
Just think where most of your food comes from!!
Farms? Oceans? Rivers?
Every last one of them use oil in some way shape or form.
90 million new mouths to feed each year, net gain!
At some point PEAK OIL will AFFECT Food Production.
THINK ABOUT IT!!!
Richard Duncan is predicting that, starting in 2008, we will go from a net increase of 200,000 people per week to a net dieoffof 300,000 people per week.
The food issue is one of the reasons why I find ethanol from corn a rather dubious means of increasing our fuel supply. Not only does the growing of corn have a relatively high fossil requirement, but in time of food shortage it competes with corn for food. Do you grow corn to feed people directly, grow corn to feed livestock for meat, or grow corn to burn it as ethanol in your car?
Price, of course, will decide the relative mix of these competing uses.
Then there is the issue of soil depletion that doesn't get much attention outside the agricultural community, but it's there, particularly with the highly intensive farming that is characteristic of modern agribusiness.
Praise has been heaped upon Brazil for its extensive ethanol production from sugar. However, some fraction of this production has been achieved at the expense of deforesting parts of the Amazon rain forest. Some say that's a very serious problem; others say we should ignore it because getting energy is more important.
Biomass for food and biomass for energy are inherently competing uses, and it is not good to get into a situation where you might have to choose between the two. Which is why I think it makes much more sense to restrict biomass for energy to non-food plants, such as some of these fast-growing trees and
scrubby 'junk' plants. The technology is there, though it is not as finely developed as the ethanol from corn or sugar routes.
Of course, eventually it will catch up to us, but I could see millions starving to death elsewhere in the world while we are barely impacted. Will they be growing luxury crops for us - chocolate, coffee, sugarcane for ethanol - while their own people starve? Wouldn't surprise me.
Nor is it just a 21st Century phenomenon.
A notorious example from an earlier time is the Irish potato famine of the mid-1800s. While Irish dirt farmers were literally starving to death, wealthy English landowners who controlled large tracts of farm land were raising cattle and exporting large quantities of beef back to England. To put it mildly, this practice has not been forgotten by the Irish, whose talent for carrying a grudge ranks right up there with Sicilians and Arabs. I guess the point I am trying to make in a roundabout way is that these economic dislocations have long-lasting negative implications, and that we are likely to see more of them as things tighten up.
In one of the city states of Renaissance Italy there was this particular merchant who was very successful at playing what was in effect an early form of the commodity futures market. He'd buy grain and other foodstuffs when there was abundance and prices were low, and then he'd sell them at a handsome profit during times of scarcity when prices were high. He became quite successul and lived in one of the better palazzos in the city.
Well, this one year there was a famine in the area, and people were going hungry. At the time, he happened to be sitting on a large store of grain, waiting for the prices to go up further so he could make a larger profit. (The merchant was a staunch early free marketeer.)
As things grew worse, a group of desperate local peasants went to see the merchant to plead with him to loan (not give) them some grain so they could feed their families until the next harvest. He looked down with scorn on the filthy peasants from the balcony of his fine palazzo, and with a dismissive wave of his hand he told them, "Mangia piedras!" (Eat stones!)
It appears that he said the wrong thing, because in the next instant the peasants stormed the palazzo, dragged the merchant out into the street, and then proceeded to hack him into unrecognizable pieces with their farm implements. A city-wide riot ensued, the peasant never got their grain, and over a hundred were summarily hanged in the public square.
Well, the 'market' did a real good job in solving this problem, didn't it?
This is the reason that I think that it is imperative for those of us in the energy industry to at least try to tell the truth to the American people about the (very) finite nature of most energy sources. It is also why I am not sure that we will be able to "enjoy" $100 to $200 oil.
We could have angry--and cold and hungry--soccer moms rioting at the gates of the mansions of the energy producers. I have only half-kiddingly told my brethren in the oil patch that we need to blend in. We need to start driving lime green 1990 Volvos with Greenpeace stickers on the back.
The biggest danger with something like that is the emergence of a charismatic leader who will offer to deliver us all to the Promised Land, whilst in reality bring us straight to hell on earth. Peoplel will follow, as they have always done.
Somebody who is starving to death and/or freezing in the dark is not going to say, "Oh well, I guess all of my misfortune is just the result of market forces." No, he is going to go out and 'get' the person or group who he believes got him into this mess. Ugliness is but guaranteed.
Social order is a very thin veneer over our bestial tendencies, and is very fragile indeed. Once chaos descends, it is hard to reverse the process.
He realy contributed to a greater good while being selfish. But he obviously got greedier then people could handle and waited too long to sell. And it would have been wise to give a percentage to the poorest to complement the "palace" social capital with being a good guy in more then evening out good and bad times for those with money.
If I understand you correctly, you are saying that the merchant acted as a moderator on the grain market, boosting prices when they were low and lowing prices when they were high. And all this time I didn't realize that the merchant was actually doing the peasants a favor by keeping grain off the market and telling them, "Eat stones!" But at what point does a market 'moderator' become a market 'manipulator'?
I think what you fail to take into consideration is that probably most of the peasants were mere subsistent tenant farmers who did not have the luxury of selling much excess grain, simply because for them there never was much excess of anything after the landlord got his cut. They were not exactly in a position to buy and sell grain futures. So, when they went to the merchant pleading for a loan of grain, they were not really partipating in any market, in the normal sense of the word.
My main point with this story is that 'The Market' does not control everything that happens in the interactions between people, and that to think it does is the height of naivete. A secondary point is that social/commercial structures such as 'The Market' are highly fragile and only function when everybody agrees to play by certain unspoken rules. Economic 101 theory says that it is perfectly OK to sell drinking water to disaster victems for $25 a quart. But I would strongly advise against trying that, lest you have a fate similiar to that of our grain merchant.
It is very true that working markets are fragile social entities. And if they break down life get to be harder for most people in a town, region or country.
One thing I find fashinating with markets, capitalism and working law systems is that they make it more likely that greedy bastards will do things that benefit their fellow humans.
I will readily agree that the greedy grain merchant did provide a useful service in that he helped turn the wheels of commerce and expand trading. He was a perfect example of the ambitious merchant class that soon displaced the landed aristocracy as the people who ran the show.
However, you must admit that his people skills left a lot to be desired.
A humbling story of history. Worth reading. My dog tore up The Wheels of Commerce.
Re: Food
Jay Hanson (began Dieoff.org) recently opined that he had better buy himself a food supply.
Better make that a two year supply.
In fact, are not the Strategic Oil Reserves precisely based on this kind of anti-capitalistic strategy?
Personally, I feel a bit uncomfortable with the idea that greed makes the world better. I cannot imagine using that principle within my circle of friends--or even acquaintances--or even community. A narcissistic, selfish approach to the world seems a bit psychotic to me, as does our little Italian marketer. But hey, what's a corporation for? Just lots of narcissistic, selfish guys running around getting theirs. Looking about, I would say they are making a mess of things. But then we have economists who sit on the sidelines keeping score. Chuckle
If you need to be bad to succeed in life we have a situation that will end in horrors and then change into something better or even worse. We realy need a good law system and dependable institutions that maintain a functioning playing field for peoples different life projects. Otherwise we will get a free for all gun carrying nuthouse where no plans can be made for more then a week in advance exept if you have a personal army and enourmous personal and capital resources will be wasted.
If peak oil gives fast economical and social changes as it probably will it is even more important with an uncorrupted law system, etc.
http://www.jodidata.org/FileZ/ODTmain.htm
Click on Access the Database
Rick DeZeeuw
There won't be one. Some terror will happen. And to those who can't wait to get Bush out of there, well the new good guys look just like the old bad guys.
China and India, the fastest growing major oil consumers, will also supply consumption and storage data for the first time
the rest of the article can be found here!
http://news.ft.com/cms/s/feac6b20-5862-11da-90dd-0000779e2340,_i_rssPage=9d5b9ebe-c8bc-11d7-81c6-082 0abe49a01.html