Tracking the EIA Short Term Forecasts
Posted by Khebab on December 31, 2006 - 12:11pm
Topic: Supply/Production
Tags: eia, short term energy outlook [list all tags]
This is a guest post by Gilles.
Hi all. Thanks to Khebab, I have the opportunity to repost a study that I made about Short Term Energy Outlook (STEO) EIA's predictions. I posted it originally as a comment to Khebab's last post , but it was buried under more than 100 comments and he thought it was a good idea to repost it in a guest post.
Animation of the EIA Short Term Oultooks from January 2005 to October 2006. Fine lines: past forecasts; Line with circle markers: forecast for the month displayed. Click to enlarge.
Please let me introduce myself in a few words. I'm a French professor in astrophysics, and I discovered the problem of PO less than 2 years ago (before that, I was rather confident that nuclear energy and hydrogen engines would solve the problem of the depletion of fossil fuels. I changed my mind a lot since this time of course, but it is worth reminding that this opinion is still mostly shared among the scientific community !) I participate regularly to the French forum oleocene , and I follow of course very closely the very interesting discussions on TOD and other similar sites. My work here is minor: I just made a compilation of recent EIA predictions. I'm not of course an expert in energy sources, but I was curious to test how the official agencies could manage the possible apparition of a plateau, in comparison with their cornucopian, ever growing production forecasts.
I drew the following graph in May 2006, by superimposing all monthly published outlooks since the beginning of 2005 (I took off some months for sake of clarity). The spectacular feature for me is that the prediction curve dropped abruptly in August 2005, i.e. just before Katrina hits. After the unusual 2005 hurricane season, the following months have accentuated the decline of the curves, but the EIA regularly predicted that the production would rise again after a few months.However, this hope has been largely disappointed, since the inflexion point has been continuously slipping, giving the impression of an everlasting postponement. The real curve is following a more or less flat line, exhibiting the famous plateau that Stuart commented a lot of times.
Figure 1: Compilation of EIA monthly STEO predictions from January 2005 to May 2006. For each month, the solid line refers to past quarters and the dotted line to predictions for the present and future quarters.
The same kind of figure was drawn this month, showing a similar pattern: after a few stable predictions in summer, the curves started to be revised downwards again.
Figure 2: Same as Figure 1, but from July 2005 to December 2006 (beware, colors have changed).
Basically, EIA has been telling us: "don't worry, the production will start again rising within 3 months...." for more than one year now ! The cumulated gap since the beginning of 2005 is now reaching around 3Mbd. They did not offer of course a clear explanation why THIS has happened !!!
For the fun, an Oleocene moderator (Sylvain) constructed an animated gif to show the EIA "snake" crawling on the ground in real time that you can watch on top of that post.
One last comment: in the last STO issue, the EIA predicts a gap between the world demand and supply of 0.3 Mbd in 2006 (84.7 vs 85.0) and 0.4 Mbd in 2007 (86.1 vs 86.5). While these figures are not yet really catastrophic (there was an extra production of 0.5 Mbd in 2005), they are nevertheless puzzling, since they indicate that the suuply drop cannot be attributed to a demand destruction. (The cumulated crude oil stock decrease would nevertheless reach 200 Mbl, two thirds of the total US stocks). In any case, I think we are founded to ask EIA naively : could you please explain us, with simple words, why do you predict that the 2007 production will not exceed 86.1 Mbd, whereas the demand is planned to reach 86.5, and that only 15 months ago, the world was supposed to be able to produce 88 Mbd in this last quarter of 2006?
Gilles
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Cheers and Happy Holidays from The Oil Drum!
What a surprise to find here a post of the famous (on Oleocene.org french site at least) GillesH38 ! It would be so nice to have a french site of the quality of TOD.
The blindness of EIA is incredible, good job man.
You think EIA is bad? Check out IEA one of these days.
10 years later and IEA, EIA & Lynch are on the money.
Yup, smekhovo, your forecast role models are the only fantasy around here:
Well, it looks like there's an upside to oil production and it looks like there's a downside. IEA to Lynch say there's only an upside and Campbell et al. said it's time for the downside - obviously a few years too early. Looks like the upside has been lasting a lot longer than Campbell thought, right Freddy?. IEA et al just keep saying that the upside is supposed to work like the Everready battery.
Too bad we're not in advertising here...
Removing the personalities, this seems to me to be the central problem in a peak oil prediction. Calling any peak, in any domain, is harder than naming the general trend. The example that springs to mind now is the housing bubble. I know people who have been calling a top for 20 years, but were wrong for 19 of those years.
It is always the best bet to say that next year will be a lot like this one. That is the statistically correct prediction. It will be right for say 19 years, until it is wrong.
Calling the 20th year, or peak oil, is tricky business. I think we have to hold ourselves in check by saying that we have indications rather than any sorts of proofs.
Good points.
The main mistakes with the past peak predictions are the same ones being made repeatedly on this board. Some have been calling for a peak for nearly two decades now - eventually they will be correct.
Well, I told my brother back in '04 that he should sell his appt. in Washington DC because the market was overheating. He didn't take the bait. Even now, why sell?
At the same time I argued that China would continue many years into the future with 10% growth because there is a dynamic behind it that can't (at least not with any normal measures) be shut off. For these reasons it only makes sense to continue to do as the EI what have yous do and assume that the past will continue into the future. That is also the meaning of time elapsed growth shift seen in Gilles' figure 1. There is no real "thought" behind it. The trend just remains your friend, right? Until it switches, of course.
I'm wondering if the production models (if any) used by Lynch and the EIA\IEA are only able to predict an exponential growth which has basically only one parameter (the growth rate). The growth rate has always been around 1.5-2.0% per year for the last 20 years. Using a model with only one parameter is obviously a lot less risky that using a logistic curve for instance which has 3 parameters.
You say "less risky" but does either method produce a probability with its forecast? Or does probability remain a secondary, fuzzy, human, meta-judgement?
That's a tricky question. Based on recent production history, a 2% growth rate is very likely. However, an exponential growth cannot go forever in a physical world so the exponential model is very unlikely on a large time scale.
I agree. In fact, sustained exponential growth is not sustainable in most systems on even a medium or short time scale. Overshoot and collapse is an all too common response in everything from prices to populations.
I worried that someone would take the idea that 2% can't continue "forever" and flip it to a psuedo-proof of collapse.
The fact is, it isn't a proof of that or anything else. There might be plateaus, there might be soft landings, there might be a "long tail" ... who knows?
This is a really good point.
The simplest model which HAS worked for all commodities in the past in an exponential model.
If Q = total fraction of resource recovered then exponentional growth is given by
dQ/dt = AQ and hence Q = exp(At) where A is some constant, a single parameter fit as khebab says.
Well the interesting thing is if you form the ratio dQ/dt/Q and plot it as function of time you should get
dQ/dt / Q = A - a constant as a function of time.
This is the well-known, (to TOD readers), Hubbert Linearization plot and rather than being a simple constant, shows a decrease as a function of time for all mature reqions, including the whole world.
A better approximation is to use
dQ/dt = AQ*(1-Q)
Which gives a Bell-shaped curve for dQ/dT and is the basis of many predictions for near term peaks in world Oil production, including my own.
However this is also an approximation and the real-world will almost certainly show some deviations from this. As I said before, if I had to bet on future world Oil production I'd go with Khebab's loglet analysis, although even that is not currently sensitive to new technologies that would come into play with Oil prices sustained above $60 Barrel.
In any case, Oil consumption accounts for approximately 40% of world CO2 emmissions, gas accounts for 20% and coal accounts for aboout the remaining 40%. Even if we have ways to increase Oil production in the future we should not it.
We should use our Fossil fuel resources to transition to new ways of providing the wealth and energy we want and need.
TOD:Canada is happy to host posts and discussions in French. If you're interested in submitting a guest post in French, contact me at Stoneleigh2006(at)msn(dot)com.
stoneleigh
not to sound crass or ignorant or both
but is there a meaningful % of people in canada that speak french and dont speak english?
I guess a more relevant question would be - what % would find an article written in french much more absorbable and informative written in french than english? (I acutally had 7 years of french but if Gilles had written this post in french, id have had a mighty struggle - except for the nifty .gif of course)
There is a significant percentage of the Quebec population that can't speak any english at all, although they are unlikely to be frequenters of TOD.
That said, my partner is a fluently bilingual francophone and a senior official of the Canadian government. Even still, she finds it difficult to read highly technical information in english and has particular difficulty with numerical information where the discussion is in english. So, if she were to read TOD, she would appreciate articles in french.
Finally, Quebecers are more likely to use search engines in french. So they might become peak oil aware through french sites from Europe, but would be unlikely to immediately discover any of the good work TOD is doing.
So, the odd french article on TOD:Canada is a good thing. Most of the Quebecers who discover TOD through a french article will probably be able to follow along quite well in english after discovering the site.
Except for along the Quebec border, there are virtually no towns or cities in Canada that break the 5% french speaking threshold needed for in-french services. But, there are hundreds of communities with significant european, asian or east indian populations that approach the 60% levels. Unfortunately, they are likely as unwelcome to post at TOD-Canada in their native tongue as they would be generally in Quebec.
I believe immigrants to Quebec are still banned from attending English schools ore erecting English signs outside and within their business premises.
Rant over...
Freddy: You are forgetting that the Quebecois are "special".
There's some people speaking french in europe too...
Thank you Gilles for this very interesting post - especially the animated graph at the top.
Another naive question to ask the EIA is when their current members plan on retiring and letting competent and sane people take over.
Even they are likely to suffer from the valence effect. We all do to some extent (except me..;)
"We all do to some extent "
If I suffer from the valance effect we are really in deep feces ;)
I look forward to your controversial neuro-chemistry post. The concept of "Freewill" is highly over-rated IMHO.
How funny! I love your article!
I think I posted half jokingly about the religion of the god TINOPO (There Is NO Peak Oil) yesterday, explaining that the religious denialists will grab on to every little fluctuation upwards and declare it as the beginning of a new exponential production growth cycle. Looks like you have identified TINOPO's high priests... it's EIA!
I also think you should revisit your thoughts about nuclear energy, once more. Energy from fusion will play an enormous role in the generation capacity of many countries, foremost the US. The fusion generator has already been set in motion and is performing perfectly within its design parameters with a power output far beyond our current and nearterm energy demand and it will be burning its copious amounts of fuel for at least another couple billion years without overheating. The only thing missing from the reactor are the radiation to electricity converters. Thank goodness they are on sale now. This is what they look like:
http://en.wikipedia.org/wiki/Solar_panel
:-)
When you finish tabulating the Infinite Possibilities you should consider also calculating the finite probabilities of each (take your time...).
And then maybe "revisit your thoughts about nuclear energy."
I'll have to agree with sendoilplease, in that there's no way we're going to "consume" our way out of an overconsumption problem. Even if a wholehearted effort were in place to create the manufacturing capacity, the amount of excess energy required to make a significant number of PV's would break the bank. Whether we call it a "surge" or an "escalation," that kind of silicon volume gobbles water and electricity, and produces lots of uniquely noxious waste. Then there's the inverters, controllers, &/or batteries.... And how about the even greater mass of aluminum or whatever the support structures will be made from? Or shall we lash together bamboo?
Armchair calculations based on the number of photons striking Saudi would be laughable in their irrelevant ineptness, were it not for their pernicious effect on all the people who are looking for an easy out. No more balm for your brain, boy: It's time to get serious about preserving as much of civilization as possible while society implodes. The question we may face in one or two generations is, "How do we guard the libraries to keep people from burning them for fuel?"
Solar panels repay the energy invested in about two years (various studies report one to many years). Progress is being made on making the support structures cheaper. Also, new silicon plants are being built to provide silicon just for PV cells. This has less stringent requirements than silicon used for electronics. In addition to PV there is also electricity made by concentrating sunlight on boilers (molten salt reservoirs store heat to provide energy at night and on cloudy days). There are also solar water heaters and similar devices used for heating.
It is a worthwhile question to ask whether we have the capacity to build enough PV capacity before oil goes into serious decline. I don't share your pessimism that it is a worthless endeavor.
Perhaps I misunderstood. I agree that we will not support "business as usual" simply by substituting PV for oil. I do think that solar energy in various forms is worth pursuing.
I just wish people would quit talking so much about PV and start talking more about all the other ways to use solar energy right now. Doesn't it seem absurd to see people in the USA using natural gas or some other fossil fuel to heat domestic water during the roasting hot summers we are getting around here, when all you have to do is drape a loop of plastic pipe around on your roof and feed it into your usual hot water system?
And then there is that argument that we have lots of roof area for PV. Sure, but area is not the problem. PV costs a lot. What about just Organic Rankine Cycle machines (low temperature steam engines). What! you say, moving parts- ohmygod!! Right, but if moving parts were all that bad, what about my watch, my fridge, my local coal fired steam power plant, my tractor, me, and so on and so on. Ever so many things have moving parts and still do good for us.
ORC machines are very well known to people who know about them, and can do a pretty good job- and at costs that I'll bet would compete well with PV if somebody really tried a modern design. But my real gripe is what I have said already too many times- gotta look at ALL the possibilities, not just one (PV) or a few.
And never to forget- the real problem is too many people, esp too many greedy, wasteful, lazy, fat and stupid ones.
Let's talk about all of it!
Hang dry clothes, solar water heating, swamp cooling instead of standard AC in dry climes. etc - as well as PV!!
What about just Organic Rankine Cycle machines (low temperature steam engines).
Show me where they can be bought? Show me where one can get a 400+ degree solar system that is as reasonable as the 1kw thermal system that output sub 200 deg. F.. I *MIGHT* be able to buy a stirling dish one day. But a dish can't mount to the side of a building. Or to a roofline.
Labor for PV cots alot. The MC connetor crimper is expensive. The electronics to do a grid intertie is expensive. Even if the PV panel drops, the labor and intergration electonics will still cost alot.
Thanks.
Always learning here.
Didn't know they called them ORC's.
It's the dawning of the age of aquarius.
Let the sun shine.
Just a quick question...
If the PV Cells repay their energy cost in just a couple of years, what do you do with the electricity? There is an energy cost to create light bulbs and air conditioners and electric cars. For a Post carbon future shouldn't you consider all the energy costs? Wouldn't you need sufficient energy surplus to repay the energy cost for the PV cells and all the other stuff you would plan to use in order to maintain a long term sustainability?
just a quick answer:
yes.
It bugs me that people confuse energy payback time studies with ERoEI. You could, I'm sure, easily find oilwells whose drilling cost was returned in a matter of days and whose total lifetime return yielded 10000:1 over the drilling cost. Makes the 20:1 or so quoted for PV look pretty silly when considered on a scale of what we need to feed our energy appetites.
As for PV energy return, I tend to agree with Don Lancaster who says, "I do not see conventional silicon pv ever reaching fully burdened energy breakeven."
Before they get to the libraries, they'll burn the forests. We must ensure that on the downslope away from energy abundance, that there will be enough education, societal cohesion, or just plain old law and order, to protect the forests from being felled for firewood, and to allow for sustainable silviculture.
Without an educated populace, or failing that, a heavily armed "Forest Ranger" type of national guard, we can watch our trees, our topsoil, our agriculture and our future, all wash out to sea, leaving behind nothing but desert.
Earth = Easter Island in space. Let's not screw it up this time.
Happy New Year!
george - as you know, vermont was clear cut 100 years ago - there were hardly any forests except on the tops of mountains and in private groves - this was BEFORE we were dependent on oil and gas .
Yes indeed - 100 years ago, Vermont was 90% deforested, today the reverse is true.
In fact this entire region had once seen most of its trees harvested and floated down the rivers to the major population centers. Burlington became rich because of the logging industry. But times have changed of course, and many of the fine homes on the Hill, built with lumber money, are now occupied by fraternities associated with the University of Vermont.
My understanding is that with the building of the railroads, those who had been struggling in the cold, rocky soil here in the Green Mountains abandoned their farms and moved to flatter, if not greener, pastures in the midwest, farming the rich soil left behind by the glaciers. It is a remarkable testament to the resilience of nature that the Green Mountains of Vermont, White Mountains of New Hampshire and Adirondack forests of upstate New York bounced back (with a good deal of help from heroic figures such as Teddy Roosevelt, who created the Adirondack Park).
However, the trees we see today were only able to grow back because the growth in the use of fossil fuels made them less attractive as an energy source. The issue approaching us now of course, is that with fossil fuels soon to be no longer easily or cheaply available, people's eyes will once again turn to these forests.
Without an alternative means to heat one's home or power one's locomotive, the forests may fall once again. Only this time there may be no high-energy-density replacement to give them the time and breathing room to re-establish.
I love walking these woods with my dog, I'm up there nearly every day. Yesterday it was sunny, the mountain behind our house was covered with snow, the moon was rising above the ridge into a deep blue sky, and it was silent and absolutely beautiful. And yet I'm always conscious of the fact that, if firewood once again becomes a precious commodity, as it once was in Medieval Europe, it will be very difficult to hold back a tide of humanity armed with chainsaws, looking for warmth or a quick buck.
Sometimes a graph is worth 1000 words. This one illustrates the transition from wood to coal to oil and gas.
I don't recall arguing in any of my posts that PV powered SUVs with 150kW engines will be the future. PV, wind and other renewables will simply become the new baseline for a future in which we will use as much energy as we NEED, not as much as we like to WASTE.
"Whether we call it a "surge" or an "escalation," that kind of silicon volume gobbles water and electricity, and produces lots of uniquely noxious waste."
How so? In order to make a thin film cell, all you need is a few um of silicon thickness. Let's take a look at that: 1m^2 of a 5um Si thin film have a mass of 2330kg/m^3*1m^2*5*10^-6m=0.01165kg = 11.65g. Such a panel can produce roughly 15W of average power for a lifetime of 25 years, which is 0.015kW*24h/day*365day/year*25years=3285kWh. That is roughly one quarter of an average US citizen's annual electricity consumption. In other words, it takes some 100m^2 of Si thin film to produce ALL of one person's electricity. In other words, it takes approx. 1.2kg of silicon... less than three pounds of coating every 25 years. If you burn that amount of silicon with air, it will give a comparable amount of heat of burning a similar amount of coal... see chemistry 101.
You might want to revisit your misconceptions about silicon use in properly designed cells. The current generation of bulk cells are, of course, worse by a factor of 100 in their material use. Since they are not made in large quantities, yet, the resulting environmental effects are negligible. As production volumes go up, material use in cell menufacturing continues to go down as a simple result of price pressure. Many manufaturers are either completely getting out of the bulk cell market or have serious R&D programs in (non-si) thin film cells going on. And let's not forget that concentrators are even more efficient by a factor of 400... they don't need any significant amount of semiconductor matrial.
"Armchair calculations based on the number of photons striking Saudi would be laughable in their irrelevant ineptness, were it not for their pernicious effect on all the people who are looking for an easy out."
I am not talking about people who are looking for an EASY way out. I am talking about replacing our current energy infrastructure with something that works. Solar works, wether you like it or not. That you are desperate for an EASY way out that won't cost any money is not my problem. It is also not part of my argument, either. The replacement of every single kW of our primary energy consumption with renewables will cost a significant amount of money. It is an investment we have made in the past and it is an investment we will make again. No big deal, in life you get what you pay for. And unless you are looking for a reason to get yourself all worked up over nothing you might want to consider this simple truth.
Of course it will be far easier and cheaper to save the first 50% of our energy consumption that to replace the other 50%. In my books that is a plus, not a minus, but then, I keep proper records about what I need and what I waste...
Call me when society will have imploded. :-)
I often find that oil production figures are often inaccurate and hard to pin down. It often helps to look at comparative storage figures. The advantage is that storage figures are harder to fake and the consequences of faking them in company reporting tends to be more severe. I've included the aggregate storage figures from the EIA for last week. (Sorry about the presentation it is a bit rough.) The actual amount of storage has actually gone up slightly year over year. A similar analysis to the one done on production figures would be kind of interesting to see.
Happy Holidays
http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/weekly_pe...
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