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Happy Peak Oil Day?
Posted by Stuart Staniford on November 24, 2005 - 2:30am
Topic: Supply/Production
Tags: gas prices, hubbert peak, oil prices, peak oil, plateau [list all tags]
World crude oil production (exclusive of NGL), as estimated by the Oil and Gas Journal. The highest production so far occurred in May 2005. The graph is not zero-scaled.
Thanks for this post Stuart, I thought this day would pass by without being noted.
Around here the few scattered peakoilers are trying to raise awareness for this matter once more - this time in a concerted manner.
I'd like to invite everyone already aware of Peak Oil, to take this day and discuss it with people not yet aware. You can send Happy Peak Oil Day postcards to your friends, mail everyone in your address book, whatever you think proper. It could be just a family talk during the Thanksgiving gathering.
Better do something than just sit and watch everything fall apart.
Tomorrow everyone will think we're lunatics. But, Who Cares?
I've got a little piece of land. Even if it is winter season it still has kale on it, as well as cabbage, sunchokes and chard. I got quite some potatoes from it last summer, despite an attack of late blight.
We'll get by somehow.
Prices are high because production can't keep up with demand, but sofar I haven't seen any real evidence of a world peak, I think it is still some time away.
In person he would say he made the prediction tounge-in-cheek. He then says it could be a few weeks to either side.
I almost forgot it. Remember that since October and till the end of December, OPEC is officially producing flat out.
If so and May is still the highest month...
Two and two makes what?... ah, five!
Cheers,
The same happened with the Texas Railroad Commission when the US-48 peaked.
It effectively cannot be used to fill the gap because refining capacity does not exist for it... We could well see rising inventories with rising prices and the lead time on new refining capacity is in years...
Unfortunately, that process appears to be only about 63% efficient (see page 37). We'd need a lot more heavy crude than light to do the job; about 1/3 more for gasoline, almost 1/2 more for diesel.
I think it would be great if Goodstein and Deffeyes got together. Their areas of expertise complement each other. The weakness in Deffeyes' books is that he doesn't get into the thermodynamics of alternatives enough, while Goodstein is all about thermodynamics.
http://www.princeton.edu/hubbert/popups/quotes.html#Goodstein
"With his folksy style and penetrating vision, Deffeyes tells it like it is. This book is another nail in the coffin of the age of oil."
--David Goodstein,
Vice Provost, California Institute of Technology,
and author of Out of Gas: The End of the Age of Oil
I live a ways from Caltech now but I'll see if I can drive down and attending this talk.
Or maybe not? But that's a lot snappier than what the graph seems to indicate, the dreaded undulating plateau at 72.25/mbd.
Is it now time for Saudi Arabia to explore the perhaps aptly named "Empty Quarter"? Personally, I think it is time to pay a visit to the Great Khan of Central Asia
bearing gifts and good wishes, despite his idiosyncracies-- On this day of thanks, we should not be disturbed that God put the oil in some inconvenient places nor should we shirk our obligation to do everything in our power to obtain it. Allahu Akbar!
Of course the graphed data is uncertain. Stuart was being ironic or facetious and so was I. So let's see if 1st or 2nd quarter numbers in 2006 indicate higher available supply numbers. But worldwide production growth is clearly not the answer--the true solution is re-scaling of national economies (US or Japan) to do more (or the same) with less.
I (and Stuart, HO and the others as well, I think) believe the current evidence for a real peak in the near-term is becoming more compelling. That's why we post here. I understand your concerns as you "[give] a talk to a group of Japanese economists about peak oil". We're all concerned. Nobody looks forward to a world-wide depression.
I can only make light of an obviously precarious situation given the fact that (at least here in the US) we've done virtually nothing to mitigate the effects. What else can we do here? TOD and others have been sounding the alarm for some time now. I only hope the coming crash in the next few years will be gentler than I fear.
best, Dave
Anyway, that's why I criticized the use of the chart. If my point was made too bluntly, I apologize. But this is becoming a fight with real swords, and one where you have to watch which way your seeming allies are swinging theirs.
http://www.energybulletin.net/11107.html
evidently, according to a group called platform (??) the iraqi poo-bahs are in the process of lining up PSA's (production sharing agreements with oil "multinationals" viz:
The report, titled "Crude Designs: The Rip-Off of Iraq's Oil Wealth", said the majority of Iraqis were against the large-scale involvement of foreign companies in the post-Saddam era. "Iraqi public opinion is strongly opposed to handing control over oil development to foreign companies," it said.
"But with the active involvement of the US and British governments a group of powerful Iraqi politicians and technocrats is pushing for a system of long-term contracts with foreign oil companies which will be beyond the reach of Iraqi courts, public scrutiny or democratic control."
now....who do you think those "multinationals" in question are??...let's see...the germans, french and russians worked with saddam before the war...and the americans and british were shut out..does that mean the PSA contracts will have a return address Houston,Tx.??
In financial markets analysis we'd call the period cfrom early 2004 to now a "pause" - its a consolidation zone, the underlying trend remains, for now, intact, and that trend is, for now, still UP.
A series of higher lows within the consolidation zone maps out a structure we call an ascending triangle. In financial markets an ascending triangle within an uptrend is considered a "bullish" pattern. I prefer to consider them as the pauses they are; what's yet to be known is whether the uptrend has legs to continue or not.
Some might argue that its unfair to apply financial price analysis techniques to oil production volume charts, but I disagree - oil and the economy (price driven) is inextricably linked to point of being synonymous. Until such time that world wide economic growth can happen with less and less oil (instead of more and more which has been the case for decades), we should be able to ascertain clues to the trend of production using price analysis methods used to model any market.
Carrying this a step further, the trend will officially reverse from up to down if production were to make a set of lower swing highs and lows under 71,000 k bbls/day. Whether such an event is caused by peak production or world wide economic contraction is another matter entirely.
Unfortunately, reality smacks pseudo-sciences like economics upside the head from time to time and there's only 1 ounce left in the bottle. Economics tells us nothing about future production, only about potential future demand. People like you, who cannot see beyond their programmed cultural mysticism, are why no valid response will occur to the peaking of oil supplies until it is too late. And down that road lies conquest, war, famine, and death.
Bottom line is that "price" is not a scientific measure. Production rate, if real, can be a scientific measure. Price is not. I've already ranted on it here
That is pure mind-twisting rhetoric.
I suggest that YOU prove conclusively that everything can be proved conclusively.
Almost nothing can be proved "conclusively" to all people.
Tyically new information is surfacing all the time.
So few things are "conclusive".
Or at least new, ignorant people are surfacing all the time.
The "market" rarely witnesses full dissemination of knowledge to all ranks of players (the hustlers, the suckers, and the not-yet-scammed masses of greed driven sheeple in the middle) all the time.
Remember cigarettes and cancer?
How long did it take for the "markets" to factor in the truth?
Way too long for many who died needlessly of lung cancer.
Scientists had proved the link "conclusively" to the scientific community.
But those who stood to lose money muddled the waters.
They came up with that same "conclusive"
manipulation line you are trying to use now.
Oil and mud don't mix.
Mother Nature doesn't heed our "conclusive, convulsive" noises. The oil will peter out no matter what. A peak production point will be hit no matter what. Maybe not today, maybe not tomorrow, as Humphrey Boggart may have put it, but all too soon.
Was Deffeyes correct that Thanksgiving 2005 was the magic day? We will never know conclusively.
You should bone up on efficient market theory, which has demonstrated to most folks' satisfaction that market prices include all available information. (It's why trying to pick stocks or time the market is a losing proposition.)
Rejecting efficient market theory is analogous to rejecting the theory of the biotic origin of petroleum. There are some people who believe in abiotic oil, but, as we've seen recently on TOD, they tend not to be taken seriously. Likewise, you won't find much support among academics for those who reject efficient market theory.
Market manias are basically Ponzi schemes. More and more people (with less and less investment experience) are sucked in as the mania continues. The longer it lasts, the more sceptics finally give in, the assumption being that there'll always be a bigger sucker down the road to sell to at a profit no matter how outrageously high the price one paid. It continues until the biggest sucker has been fleeced. The smart money cashes out in time and leaves the public (and their pension funds) holding the bag. The market crashes and the shares (or real estate or tulips or whatever was the focus of the mania) end up being virtually worthless. A great deal of wealth is wiped out in a deflationary collapse.
The stock market is setting up for an almighty crash, as is the US dollar, real estate and eventually the derivatives market. No lender of last resort can bail that out.
Yes, there will be bubbles in the future, as there have been in the past. What you cannot do is time the bubble so that you get out before the crash. That's all that efficient market theory holds -- you can't time markets: day-to-day prices move in a "random walk."
I share your fear that the stock market and other markets may be setting up for an almighty crash. But don't look for any clues in price movements about whether and when that crash will occur. Can't be done.
There has been a very long bull market uptrend, which lasted long enough to morph into a mania. Market timing is forgotten under such circumstances, as is pretty much everything except buy and hold. I'd predict that it will be remembered before the bear market trend has built up too much of a head of steam, but by then the public will no longer be participating to any great extent because it will have lost its collective shirt.
I've seen some very interesting market timing work by Robert Prechter (www.elliottwave.com). There are both quantitative and qualitative aspects to it. I'm agnostic about the quantitative side, although I've seen him be uncannily accurate at times. As I'm not a trader I don't need any great degree of day-to-day precision. The qualitative side is far more interesting as far as I'm concerned. Crudely put, it involves watching where the herd is going, especially when it's almost unanimous, and going in the opposite direction. Given our programming to act collectively, that usually involves a degree of cognitive dissonance. That's where the rationality comes in.
At an extreme of optimism, the next move is probably down (as the lemmings go over the cliff), so withdraw your capital before that happens without waiting to wring every last ounce of profit from the situation. Cashing out early, even very early, is far better than waiting until it's too late. The greater the degree of optimism, the greater the urgency to withdraw from that particular market, because widespread optimism is built on past performance (ie it's late in the trend), not future performance.
A bear market in stocks is conversely a bull market in cash, so stay liquid and watch the value of your cash appreciate against stocks, bonds, commodities, real estate, goods and services (ie deflation). When prices have fallen sufficiently far and everyone else is extremely pessimistic, there will be many investment opportunities available for the capital you will have preserved, although you'll have to climb a mental wall of worry in order to bring yourself to take advantage of them.
The difficulty in the meantime is holding on an ephemeral pile of uncommitted choices (ie cash) while all hell breaks loose around you. Personally, I maintain a stake in the real estate market (ie my small farm) and some commodities (eg my firewood pile) even though I'm convinced the real estate market will crash and remain illiquid for quite some time. I regard it as a consumption item I can afford (ie I didn't have to go into debt to acquire it) rather than as an investment. By making some choices in advance, I am hedging my bets.
Funny, Martha didn't call me with that special [insider] information she had about Imclone.
Out of curiosity...is this anything like spreading the entrails of a dead chicken out on a board?
As we stand at the Peak it is truly a monumental occasion in history.
As we stand here having climbed the biggest mountain in history let us pause a while to remember the great MKH. Although he was able to climb to top of the L48 peak and foresaw us getting to this one, he is not able to share it with us today. As students of the great man and keepers of the PO flame we, seemed to take longer to get here than he expected we would. This was because we took some time out, rested and got diverted along the way.
This is a mighty achievement that would not have been possible without the many people who have made it possible. Let us toast to the engineers and geologists who have made it happen. Your ingenuity seemed to conquer all known limits. Also to the economists who told us nothing could stop us. Records were meant to be broken. Thanks to you both.
As we rest up on these heights, it is now time to rest and enjoy the view. Time to savour the sweet moment before the smog hinders our view and time to begin thinking about the long climb down and possibly the thought of climbing the big one. The monster peak known to all called Abiotica.