 | When completion is not the end | The Oil Drum | I guess this is discourse...? (or Levitt of Freakonomics on today's Maass piece) |  |
The Beginning of the End of Oil?
Posted by Yankee on August 21, 2005 - 8:43am
On Thursday, Prof. Goose told us about an extensive article in the 8/21 edition of the NY Times. Well, it's out. Peter Maass is sympathetic toward the peak oil idea. In fact, in the last sentence, Maass write, "When a crisis comes—whether in a year or 2 or 10—it will be all the more painful because we will have done little or nothing to prepare for it."This post is an open thread about the article.
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A major American newspaper has actually made a serious effort to investigate the situation with Saudi Arabia.
For me, the money quote is this: "I didn't need to ask about Simmons and his peak-oil theory; when I met Muhanna at the conference in Washington, he nearly broke off our conversation at the mention of Simmons's name. 'He does not know anything,' Muhanna said. 'The only thing he has is a big mouth. We should not pay attention to him. Either you believe us or you don't.'"
If there's one thing I've learned in business negotiations over the years, it's that if you ask a polite but frank question and you get an angry and defensive response, you have uncovered a major problem. That guy is lying. Even if Simmons isn't 100% right, he must be a lot more right than they are willing to admit. I'd bet my civilization on it.
Stuart.
That's a credible story but I'm not sure how acceptable it will be to the PO true believers. And for skeptics, it's a lot easier to imagine new technologies coming into play by 2015 or 2020 than if the peak happens next year (or even sooner!) like we hear from the hard core faithful.
http://theoildrum.blogspot.com/2005/08/more-on-saudi-fields-and-rigs.html
and here
http://theoildrum.blogspot.com/2005/08/updating-saudi-oil-production-plans.html
To me, the largest question is this. Given that the big fields are drilled with horizontal MRC wells into the oil layer, why wouldn't we expect the current depletion rate on the existing production to accelerate rather than stay the same?
Stuart.
Your right, al-Husseini does come off as the most credible person in the article. However, even if the Saudi's do increase their production to 12.5 million barrels a day by 2009. That is only an annual increase of 500,000 barrels.
When we compare this new data, to the EIA numbers that state NON-OPEC production is declining 500,000 barrels per year. We can see clearly that the increase in Saudi production, will be off set mostly, if not completely by the NON-OPEC decline.
I think these two figures say that we are entering a period where total production will plateau for the next five years, and when the Saudi's do begin to decline in 2009 - 2015 we will start the descent down the other side of the bell curve.
I do not claim to know the Magic number at which we reach maximum production. Perhaps, we are at peak now and 85 million barrels is it. Or perhaps high oil prices, will cause a mad rush for oil and for a couple of years we will reach 90 million barrels. Either way, I would say it is safe to predict that we are reaching "the end of spare capacity" and on the same token "the end of cheap oil", which is dependent on 2 to 5 million barrels of extra production capacity.
Naimi is obviously a mouthpiece; I give him zero points for credibility. I can think of reasons to doubt Simmons, he admits that he is interpolating from limited data, but I don't think he is intentionally skewing that data, or loony. al-Husseini may be in a position to know that we have a little more time before the world peak, but this is the first time I've heard of him, so I'm hesitant to place his opinion above Simmons based on one article.
A silver lining either way as Wal-Mart is doomed.
... if you want to name someone for immediate trouble, think of people who rely on AIR transport. How high does a fed-ex envelope have to go before it becomes a non-starter? How long before trains again carry the bulk of our mail?
(reading a book about trains now, one footnote was that the dissapearance of the "airmail" stamp came when ALL mail started to go by AIR)
And yes, FedEx and UPS will be scrambling to survive as well. But shipping costs are what they are and will be paid. However, Wal-Mart is where Aunt Pearl goes to buy cheap mascara, and when it ain't cheap anymore, Pearl will look elsewhere... or horror of horror, go without. And that's when the American economy goes bust.
My guess (only a guess) is that the shoes or microwave at WalMart actually have a lower energy (specifically oil) content than the shoes or microwave at the corner store. For one thing, they probably have at least one fewer "hops" in their transit from factory to store.
.. still guessing, I think that in a tight economy, with recession-bound frugal spenders ... WalMart and CostCo will do less buiness than they used to ... but they'll do more than the higher margin guys.
Unfortunately, jobs are created with such consumption. The engineers, die makers, home builders, package designers, and delivery truck drivers, all trade their time making garlic choppers and home theater systems to you, which you trade for by doing something else. And this activity by millions of people creates an enormous variety of products available to us; millions of products, each attempting to distinguish themselves with one feature or another, each trying to fulfill a niche. Every physical need which you might have, and even some which you never knew existed, seems like it can be fulfilled by a product or service found in the global marketplace. Life is easy, routine, painless, and b-o-r-i-n-g for most people in modern industrial America. (Boring except for those moments of terror that are experienced when someone loses a job, goes broke, and suffers real deprivation and hardship.)
The point being that frivolous consumption creates not so frivolous production, which will of course disappear once buying habits change, necessitated by consumers not having enough money in their pockets for frivilous things due to high gas prices, and inflation.
Ciao.
In the U.S., there will be a huge crop of educated, or semi-educated city folk, hitting the job market en masse. The U.S. still is home to the corporations that guide the manufacture of most products; most of the managerial and support functions occur here - product design, manufacturing process design, logistics, finance, marketing, packaging, and distribution. When the plastic crap from overseas starts getting expensive, many of these people will also be laid off, meaning their buying power drops as well, contributing positive feedback to the equation. Less buying, means less production, which means more layoffs, which means less buying, and the cycle continues.
Of course, those who have steady work might find their situation improve a bit, as prices are pushed down and incredible bargains are offered to entice the rarer and rarer customer. In the coming global depression, the definition of "steady work" might get a little mangled.
These being educated folk getting laid off and fired, they will be in a position to think of socio-political "reforms", to change the rules of the game now that so many are losing. Whether they will be able to act upon their ideas remains to be seen. How far down can they go without upsetting the apple cart? Wherever it is, we're likely to get there, somewhere on the far side of Hubbert's peak.
The tipping point, where revolution or 'reform' is seen as so desirable that people risk their comfort for it, might occur when enough people who are still doing ok during the depression decide to take sides with the portion of the population that isn't, since they see that their situation isn't all that stable, and they are soon in the same boat. If the situation happens to get to be that the majority would do better with a new socio-political paradigm, it's a sure thing.
Meaning that the U.S. would probably drop free-market capitalism in a heartbeat.
http://www.pbcommercial.com/articles/2005/08/20/news/news1.txt
http://www.armageddononline.org/forums/showthread.php?t=2836
"Rapture" (18%) is a close second to "not in my life time" denial (26%) among the polled responses.
http://www.freakonomics.com/2005/08/peak-oil-welcome-to-medias-new-version.html
I am starting to get a little annoyed with the pomposity of economists and (sometimes) geologists in their response to each other on this issue. Does anyone know of a REASONED debate between the two sides, where they agree to disagree? Or am I hopelessly naive?
p.s. I think the contributors to this site do a great job and I thank them for it!
That's a start.
http://www.oliverwillis.com/2005/08/10/shades-of-carter/
It is always fascinating to see how
"Those Who Are/Is Not ... Aware Of Hubbert"
(the TWAIN AOH's) model the world inside their heads.
A little knowledge can alter one's whole world view.
(You mean, you mean, it's not flat and oil is not going to be there at infinity and beyond?)
P.P.S. "They" are not stupid. They are uninformed. There's a difference.
Much climate control is electricity based, especially the air conditioning used in summertime. But only 3% of electricity generation in the U.S. is petroleum based. Peak Oil will have little or no impact on availability of electricity. Talk of climate-control becoming "just a fond memory" makes Maass look like an idiot. Luckily the rest of the article seemed much better grounded. I guess he just didn't think to check out where electricity comes from.
As a southwesterner I hear that you folks use oil ... but I've never actually seen it ;-)
AFAIK, no major power producers just burn oil. The 3% comes from start-up in oil/gas plants, and in those small diesel roles.
... but again, I think "climate control" means heating oil delivered to the customer.
http://tinyurl.com/5ya5h
On a national basis we use 57% natural gas, 31.3% electricity, and only 8.6% oil.
I had this picture of the whole northeast using oil .. semi-accurate:
"About 75 percent of the households across the nation that use fuel oil to keep warm during the winter [that 8.5%] were in northeastern states and Alaska. Use was most common among households in the six New England states: Maine (79.2 percent), New Hampshire (57.3 percent), Vermont (57.0 percent), Connecticut (50.1 percent), Rhode Island (41.4 percent) and Massachusetts (38.3 percent)."
So, few home¤»|A a national basis, but concentrated in the northeast.
True enough, right now the US generates only 3% of its electricity with oil, but what happens when plug-in hybrids and all-electric cars start hitting the market in just a couple of years? That's when we'll see the beginning of the shift of transportation energy demand from oil to electricity. It's also an excellent example of why I've been saying all along that we need to look at the whole energy picture and think long-term, and not focus on just oil issues and the next few years.
And, of course, this example is a very strong argument for increasing the generation of electricity from renewable sources as much as possible.
What I've just mentioned threatens about 68% of electric power generation. While only 3% of total energy produced directly 'comes from' petroleum, much of what is remaining is acquired using petroleum.
Maass may have been thinking about Peak Natural Gas when he wrote that sentence. But Peak Oil probably will have an impact on electricity generation. For example, if people start using plug-n-go electric cars instead of gasoline-powered ones. The demand on the electricity grid would rise tremendously. Where would that energy come from in an environment with less (and more expensive) natural gas and oil? It'd probably have to be nuclear fusion or coal.
if a sizeable partof coal production gets diverted in
this way it will drive up the price of coal
Nick Rouse
The continuing emphasis on Saudi Arabia in this piece is misguided, because
- According to al-Muhanna and Husseini, its going to be 12.5/mbd by 2010 and that's it. Husseini is clear that going beyond that risks major damage to their fields. Why would they do that? CERA gets their numbers from al-Muhanna, who is a mouthpiece for Aramco.
- All in all, +3.0/mbd by 2010. So what? Given the exponential decline function that says we'll need 6 to 9/mbd/year just to stay even until 2010, I am not impressed with Saudi Arabia's new output.
- I am impressed with the fact that West Africa (Nigeria and Angola) is supposed to supply an additional 2.62/mbd by 2010 (with proved reserves of about 33 bbo) according to Yergin. This is a paltry 380,000 bd less than the vaunted Kingdom.
Unconventional sources (Canadian oil sands, CTL, GTL, Venezuelan "heavy" oil) and new sources (ocean deep drilling) are only touched on because of the emphasis on Saudi Arabia. This is too bad because Maass is describing a power shift in which Middle Eastern sources and are less and less important in meeting overall demand as time goes on. There's much more to say, but I'll leave it at that.about the peaking of American oil production when, in 1972 the Texas Railroad Commission allowed 100% production quotas thus abolishing production restrictions.
What does it say about OPEC when Reuters reports in an article of Aug 23 2005 titled "Oil rises as Iraq spurs supply worries" :-
OPEC member Nigeria said any talk of raising cartel quotas at a September 19 policy meeting would be "academic" for now as producers are being enouraged to pump at full capacity. "We are so far from worrying about quotas," Edmund Daukoru, minister of state for petroleum told reporters on Tuesday. "I think for now OPEC will be happy for any member who has the capacity to produce."
Nick Rouse