Interesting times get more so
Posted by Heading Out on May 2, 2006 - 10:51am
Venezuela, the world's fifth-largest oil exporter, has struck a $2bn deal to buy about 100,000 barrels a day of crude oil from Russia until the end of the year.And from the Mosnews story.Venezuela has been forced to turn to an outside source to avoid defaulting on contracts with "clients" and "third parties" as it faces a shortfall in production, according to a person familiar with the deal. Venezuela could incur penalties if it fails to meet its supply contracts.
Documentation obtained by the Financial Times shows that the state-owned Petroleos de Venezuela (PDVSA) made a financing arrangement this month with investment bank ABN Amro to facilitate the purchases of oil from Russia via Rotterdam.When this is taken with the fact that the Bolivian government has just taken over the refineries and oilfields.PDVSA is believed to have dropped the Dutch bank after the Russian government agreed to provide Venezuela with an "open account" facility to buy the oil.
The Ruhr Oel refinery in Germany, in which PDVSA has a 50 percent stake, may be among the clients that are being supplied with the Russian oil.
PDVSA would not confirm on Thursday, April 27, that it was buying oil from Russia but said a statement would be issued on Friday. The company said it would be "logical" that the Ruhr refinery was sourcing some of its oil from Russia because it would be cheaper than transporting it from Venezuela.
The measure "seeks to ensure the functioning of oil facilities to guarantee the normal supply of energy in accordance with international agreements as well and to fulfill domestic needs," an army statement said shortly after the president's announcement.it suggests that we are definitely entering one of those "interesting times", if we weren't in it already.
On the other side of the coin, the Norwegians are now able to expand their exports of natural gas by 40% because of the start-up of two new fields. This will include an LNG facility that will supply the US among others.
Snohvit includes Europe's first large-scale liquefied natural gas (LNG) terminal with an initial capacity of 6 bcm a year and a potential expansion to 12 bcm a year. Built by Norway's Petoro and state-controlled Statoil, France's Total and Gaz de France, and Germany's Amerada Hess Corp. and RWE, the project will combine production from the Snohvit, Albatross and Askeladd fields and connect by pipeline to an onshore receiving terminal at Hammerfest. From there, the gas will be exported from the newly built Melkoya LNG facility. Destinations for the natural gas include the United States, Germany, Spain and France. The three fields have combined reserves of around 193 bcm, which at the expanded production rate gives the project a lifespan of 20 years.
This is good news and can be taken with the news that 3 new LNG facilities have been approved by the US FERC.
BP intends to build a terminal at Crown Landing in New Jersey, along the Delaware River. Its formalized risk assessment includes making the carrier berths deep enough for ships to land and unload safely at all tide levels.The Delaware facility is somewhat controversialDominion's Cove Point LNG proposes expanding its existing LNG import terminal at Cove Point, Md.
Sempra Energy proposes to build a LNG terminal in Jefferson County, Tex., near the Texas-Louisiana border in two stages of 1.5 bcfd each
The terminal would stand in Logan Township, N.J., but its pier would extend into a section of the river that is inside Delaware. Tankers carrying 52 million gallons of liquid gas, enough to meet a day's energy needs for 17.3 million homes, would arrive two to three times a week in an operation worth tens of millions for each shipment and billions annually at current gas prices.The Cove Point addition is also not without concern, although the intent to add a facility at Sparrows Point may be more controversial. Cove Point is, providing it can survive the controversy planned to come on stream in 2008.Mueller conceded that the court case could take 12 to 18 months to complete, barring the company from completing Crown Landing before 2010.
The FEIS reveals that FERC is moving along with the Cove Point LNG expansion despite cries by Washington Gas Light (WGL) to reject the project until it can be shown that LNG deliveries from the Maryland facility are interchangeable with traditional gas and will not negatively impact the utility's distribution system. WGL in early 2005 blamed Cove Point's LNG for multiple leaks that erupted on its system. It contends that Cove Point's expansion could pose even more problems (see Daily GPI, April 7).Sempra's Texas facility is now scheduled to come on line in 2009.The expansion, which is scheduled for 2008, would increase the sendout capacity of the Cove Point LNG terminal in Calvert County, MD, to 1.8 Bcf/d from 1 Bcf/d, and would boost storage capacity to 14.6 Bcf from 7.8 Bcf. The project calls for the construction of two 160,000 cubic meter single-containment LNG storage tanks. Affiliate Dominion Transmission Inc. proposes to construct 161 miles of mostly 36-inch and 24-inch diameter pipeline in Maryland and Pennsylvania, and associated aboveground facilities in Virginia, Pennsylvania, New York and West Virginia. . . . . . . . . The Cove Point LNG terminal currently receive about 90 LNG shipments annually and would receive up to 200 shipments each year following the construction of the expansion.
Meanwhile the Japanese are buying more Australian LNG.
Toho has agreed to increase its LNG purchases from the North West Shelf to about 1 million metric tons a year starting April 2009, up from about 230,000 tons a year now, Woodside said Monday.And the Germans have bought into the Russian Yuzhno-Russkoye field which will provide gas for the pipeline from Russia that slips around Ukraine - maybe solving some of that problem.
The Woodside-operated North West Shelf, offshore northwestern Australia, is negotiating new contracts with eight Japanese electricity and gas companies who originally signed up to buy a total of 7.3 million tons of LNG a year.
The 10-year Toho deal follows a March agreement with Chugoku Electric Power Co. (9504.TO), who agreed to buy up to 1.4 million tons of LNG a year from 2009 for 12 years. It also comes amid Japanese reports Woodside is looking for a 30% price rise in the talks.
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WestTexas has done a great job of presenting his "ExportLand" Model" which demonstrates the reduction in supply due to an exporter reserving a greater portion of national production for domestic use.
Now we need to recalibrate that model to account for "ExportLand" making open market purchases in order to satisfy its prior contractual commitments.
Talk about interesting!!! And more than a little frightening!!
The only semi-useful function it might have, is to maintain some sort of ILLUSION of continued control. If it just dissolved itself, it might start a panic... as reality sinks in.
As several people have pointed out, a key aspect of the Export Land model is that increasing torrents of cash flow going to the exporters dramatically increase their rate of economic growth in the exporting countries, and thus their energy consumption, e.g., car sales in Russia are up 15% year over year.
Remember, what an exporter can export is their production less consumption. This spread is narrowing, between flat to declining production and increasing consumption.
What an importer wants to import is the opposite, domestic consumption less production. By and large, this spread is increasing, between increasing consumption and falling production.
Another factor is the dawning realizatin that exporters now have pricing power, especially the realization that they can sell less oil now for more money per barrel, and prolong the life of their production.
As the article pointed out, a big contributing factor to the decline in oil production in Venezuela was because of technical/political problems. On the other hand, depletion marches on regardless of technical/political problems.
I am struck by the gap between the promise of the "vast" reserve potential in both Canada and Venezuela, versus the actual production results over the past two years. As most of us know, there is a big difference between reserve estimates and actual production.
Article on Mexico's oil production & immigration:
http://www.worldpress.org/Americas/2326.cfm
Once that happens, the number of truly desperate people attempting to cross the border will swell exponentially. Given how rancorous the debate over illegal Mexican immigration is now, can you imagine what it will be with 10 times the amount of people trying to get in?
In a few years, Mexico will look like Zimbabwe - for all intends and purposes, a failed state due to Peak Oil.
In other words, there is a feedback that should be conisdered that may ameliorate the tendency to lock up production for domestic uses.
Your point is well taken and correct. I just am not convinced one way or another how this will play out. I think economic modeling efforts must account for the scenario (in some sense) as I described above.
As an example of something less linear, if a country uses an initial injection of cash to start a local economy that produces a variety of goods, keeping that economy going with energy will be more important that the cash revenue. Energy becomes the ultimate wealth sustainer. However it seems those in power in oil rich countries have been happy to just take the cash and not invest it in the national economy. There are exceptions to this, I think the Saudi petrochemical industry is one example.
While thinking of these problems as overlayed slopes is a useful modelling thought exercise I think everyone acknowledges that reality is a lot more complicated and messy.
-Ptone
sources .. oil sands, heavy oils, oil shales,
and CTL are huge resources, but they will never
scale to replace conventional crude especially
once depletion sets in ..
Triff ..
http://www.vcrisis.com/index.php?content=letters/200605021527
Venezuela: A Sudden Plunge In Production?
Dr. Joe Duarte
Excerpt:
The Venezuela oil purchase report is indeed landmark in our opinion, since it offers multiple possible lines of thought, not the least of which is the possibility that it is a sign of the peak oil phenomenon.
To be sure, Venezuela's government is increasingly adroit in the financial markets, as Mr. Chavez has reportedly shown interest in using PDVSA and his government in ways similar to hedge funds, by timing markets and moving assets rapidly from one arena to the other.
Thus, this could be a shrewd business move aimed at cutting transportation costs to some of PDVSA's clients.
That seems to be the party line. According to the Financial Times: "PDVSA would not confirm that it was buying oil from Russia but said a statement would be issued on Friday (April 28). The company said it would be "logical" that the Ruhr refinery was sourcing some of its oil from Russia because it would be cheaper than transporting it from Venezuela."
Yet, the other side of the coin, which must be given a fair airing, is that Venezuela's oil production is rapidly dwindling, or that at least Chavez' gifts to Cuba and other left leaning South American countries, in the form of hundreds of thousands of barrels of oil, are starting to take their toll.
If indeed some 10,000 wells are off line, and Venezuela's technical expertise is near rock bottom, then the latter is more likely.
Somewhere in the midst of those two extremes is the truth. Unfortunately for the oil markets, and perhaps the global economy, we are not likely to find that truth until it is upon us, or more likely, until it has been in progress for months to years.
One thing is certain, though. If PDVSA, and Venezuela are running out of oil, the news will eventually leak out, and the situation will gather steam, with significant consequences to follow.
Now what will the importing countries do with energy? Continue the Fiesta or use it wisely to bootstrap a viable future alternative?
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
Thxs for responding. Are you worried about a fast-crash like me? It seems so from your response. If so, then please help spread the word on the need for distinct, large biosolar habitats with Earthmarine protection for when detritus entropy really kicks in. We need all the mitigation help we can get to ramp up biosolar Powerup, sustainable population levels, and protected biodiversity. Unless you have a better idea to possibly make us smarter than yeast for the coming squeeze through the Dieoff Bottleneck.
Even Jay Hanson, as hardcore a Doomer as they come, cannot bear to discuss his accurate predictions anymore. Is time short, or do we really have the luxury of the free market to provide more party favors for the ongoing Fiesta?
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
I think there will be a series of crashes in the next 25 years not due to geology but due to political failure, just look at the diasters that hit the world in 1914, 1929, and 1939, and this was in an age of resource abundance.
My view is that outcomes will vary by locale. Zimbabwe is suffering collapse (mainly due to political failure) and increased mortality already. My location, NZ, probably has enough biosolar productivity to feed its current population size (but no food exports) even after the artifical fertilizers are gone, and enough coal to maintain a 1900 level of technology (trains, electricity, steamboats) pretty much forever, several thousand years. In twenty years, I will be 70, so the longer term issues are academic for me anyway. The only local worries in the next couple of decades are economic depression (likely), pandemic(?), and invasion(?). As for Earthmarines, we only have 3 frigates to protect our habitat, not nearly enough to keep Japan, India, the US, China or even Australia out.
The US is in an intermediate situation, not as unfortunate as Zimbabwe but in many places much worse off than NZ. It is hard to think of a worse place to be in the US than Phoenix, dependent on air conditioning, the car, and imported food and water. Not to mention the reconquista issue. New Orleans was the first city to fall to climate change and political failure (which is not unrelated to PO - if the US was a creditor nation with a budget surplus, the levees would have been ready). I would not be surprised if Phoenix is the next city to collapse, and not so far in the future either. Have you considered relocation within the US? As many have suggested, the temperate and well watered areas of the NE and NW have better long term prospects.
As for making us smarter than yeast, the dieoff is not the problem, it is the solution. If planners have higher survival rates during the dieoff, the survivors might have a gene mix and culture more appropriate for the biosolar aftermath. Of note several delphinids appear to be smarter than yeast. Bottlenose dolphins kill their excess children. Orcas seem to practice some form of birth control, but that is poorly understood.
Good post. One point. I do not think a budget surplus would have mattered in the case of New Orleans and the levee system. It was lack of vision. Same for a repeat major earthquake to hit near where the New Madrid did in the early 1800's (considered the most intense in historical times in the USA). St. Louis would be devastated because building codes for centuries did not take that into consideration. Interestingly Memphis has been more progressive on earthquake standards for decades than almost anyplace.
So yes, I think it was mostly a political failure.
They got two out of three...so far.
~Mike
San Francisco
Thxs for the thoughtful response. Yeah, the US Southwest is predicted to be hit hard and early--too reliant on detritus infrastructure, and at the ends of this infrastructure spiderweb, with vast Overshoot relative to the sparse biodiversity. Such is Life: Dieoff IS the solution and most of us should expect to die in place.
I cannot leave till my mother expires [83 & frail], but I hope she lives forever. My father died last Aug: I am her primary caregiver and a relocation would kill her. I just hope things hang together while she lives. My longtime girlfriend and her son, now 32, [I dearly love both] are in full denial-- both refuse to even discuss it, which breaks my heart. I am highly conflicted over this--no bio-offspring of my own, but severe dopamine addiction to these precious, but deluded people.
Severely doubt if we will have the resources to relocate to a more survivable area, and our small house and lot cannot provide any significant food. The last piece of vacant neighborhood public land, that could have provided a small community garden, was recently paved over to provide a senseless senior community center. My emails trying to stop this from happening went unanswered by the city council. Those elderly that could afford it, relocated elsewhere: neighborhood is full of young immigrants with lots of kids/family.
My neighborhood is not wealthy, by any stretch of the imagination, with a high mix of various groups-- hopefully ethnic strife can be averted. I have talked to all my neighbors-- they think I am nuts, just like my significant others. I expect that they will say I was right all along when they come to forcibly take my last can of sardines.
Lots of shuttered businesses around me, but GoodWill Store and Salvation Army Store is booming. Sadly, exurbian McMansions booming--500,000 moved to the 'Valley of the Sun' in the past five years--endless asphalt paving and bigbox malls in direct violation of Kunstler's warnings.
Those posters that can afford a survival retreat: I am happy for them, please don't waste your opportunity. Politically work to somehow secede your habitat from the hapless detritovores, and welcome any biosolar-minded neighbors. You will need all the help you can get from being overrun WTSHTF.
Hopefully, my free gift of large biosolar habitats with Earthmarine protection takes root-- then maybe we can hire on as bottom-feeding serfs until the end of our days, otherwise, the coming strife in Phx will take us out early. Such is life: the future belongs to the young--always has, always will.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
You are with your loved ones. I can't think of anything more important than
that. Think of most of the people in this country (many who post here) who have family scattered all over the country and abroad. At least in your situation, potentially dire as it may seem, you will have many precious moments together before the SHTF.
Do you own some sort of crystal ball? Who the hell really knows how this is all going to come out? Maybe you are meant to be exactly where you are right now. Granted I rate Phoenix right up there with Las Vegas as about the most unsustainable place to be in this country, but when making that assessment, I am using limited knowledge of future weather patterns and total unawareness of whatever small, non-historic niche you may fit into.
In less than three weeks, I am breaking my lease on my "luxury" apartment in north county San Diego, quitting my $75K+ a year job (with full benefits) at Northrop Grumman, and moving to Colorado to live with my mom in close proximity to the rest of my family.
My mother lives in a Frank Lloyd Wright-clone house that is all brick and glass, no attic, no possibility of insulating or even closing off areas to reduce the heating costs in winter. While she does have three acres with goats, chickens (may be a bad idea), horses and mules, there is no topsoil worth mentioning, and no independent water supply.
My first choice to live in these "interesting" times would be a place like Minnesota, Wisconsin, Oregon or maybe Vermont (gotta love their secessionist movement). However, my family (at this point) would never consider it, so I'm Colorado bound. To the suburbs. You know what? After 30+ years of being away from my family, it's OK. THERE IS NO BEST PLACE, just people you love.
Karen
PS. Not a single person I work with, even when I said I had no job lined up, said anything but "Go for it." Maybe everyone is not as clueless as I believe them to be.
I've been doing this sustainability/survival stuff for over 30 years, cetainly long before it had a name and became somewhat fashionable. To me, the reality is that it doesn't really matter whether the crash is fast or slow. There is neither the time, the will, the individual/area experise nor capital to pull it off.
Further, my experience with relocalization efforts is that the groups (who you would expect to be in the forefront of the crash issue) never, ever take the time to prioritize what needs to be done in order to survive. I've written a number of essays on this topic that have been posted on other forums or circulated by email. My concern is that the groups give their members a false sense of security while wasting time on peripherial/warm-fuzzy issues. If concerned people are going in what I consider to be the wrong direction based upon my actual experience "doing it", the remainder of society is doomed.
You use words that no other poster uses.
Detrivore.
Earthmarine.
Biosolar habitat.
The lack of use of such terms by others makes understanding what you write extremely difficult and therefore meaningless. Could you please find better known terms so we know what the hell you are saying?
Detritovore: Someone who survives off the leftovers of gone by ecosystems. Dumbed down: addicted to fossil fuels.
Earthmarine: Military operatives whos mission is to protect the habitat (place of living) of those who want to maintain a Biosolar lifestyle. The protectors of the future society that we must build. Service will be mandatory. Like in Isreal (except we'll be the good guys)
Biosolar Habitat: A place of living for people who wish to survive off the daily input of the Sun, with very careful management of detritus energy sources, with the goal of fully weaning off detritus.
And Bob ain't the only person who is using these terms. These are the terms of the revolution.
There is actually a whole world out there that does not assume people are nice. There have been unending discussions/debates on
http://groups.yahoo.com/group/energyresources
between Jay Hanson and others. Jay's position is that people will try to take you out because it's in their genes. He also has his own forum on yahoo - dieoff_Q&A.
There are also untold forums such as
http://www.survivalblog.com and http://www.thehighroad.org
who discuss the nitty-gritty of security, that is, weapons and tactics among other things.
One of my essays (mentioned above) dealt with priorities. The first item on the list is personal and area security. I live in the boondocks and I assure anyone that it would be a mistake to come up our private road if TSHTF. FWIW, the second item is potable water.
To get a feel for what is out there, here is a story, novel actually since it's close to 300 pages, about what happens after an EMP.
http://www.giltweasel.com/stuff/LightsOut-Current.pdf
Here is a short one about a Bugout gone bad:
http://www.thehighroad.org/showthread.php?=172494
My point is that there are a lot of people, although they are a small percentage of the population, who take a societal crash seriously. I am reminded of a sign that used to be in every country car repair shop: "In God we trust. all other pay cash."
Thxs for the definitions--could not have said it better myself!
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Thxs for responding. If enough people can be informed by Peakoil Outreach efforts then they will realize war will only result in the fast-crash scenario lickety-split. Hopefully, they love their children more than that and purposely chose Powerdown. Would you rather have your child die in your arms or bleed-out in some forsaken sand dune 8,000 miles from your last embrace? We will soon have to make this godawful Dieoff decision. Choose wisely please.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
I think your either/or argument oversimplifies the situation. We have a whole lot of coal. Not estimated reserves or something another country claims...its ours. Do I think we should burn it and keep up our pace of living no but I do think we should us it to transition to solar/hydro nuke and continue research on efficiency. No parent wants to bury a child and I don't think it will com to that. At some point there is a diminishing return both of drilling for oil and going to war for it. So I don't believe we have to choose between death here or there. Incidentally I am glad we have alarmists to draw attention to the cause but I think Earthmarine/Biosolar/Detritovore could easily be labeled "crazy" and draw attention from the real goal. Steady progressive powerdown to a sustainable level. I am in Sao Paulo, Brazil today and I have not been in a private auto for 2 weeks. There is no AC in my fiance's house and no water heater. But the beer is cold and the food is great and I walk or bike everywhere. Its a nice lifestyle. I see this as the future not roving bands of pirates.
Matt in Brazil
Humans are smart enough to make beer from yeast.
Though nationalization of energy does not directly imply that they will be secured for national use. It could just mean that the fields are exploited for a different group of people, whether the population at large or those who inhabit the power centers of government.
Another though: nationalization could result in (a) decreased production because of inefficiencies, leading to slower depletion or (b) gross mismanagement and damaging of the fields, as apparently occured in Iraq, though I'm not sure whether one can damage a gas well in the same way that one can an oil field.
Not necessarily. They will probably continue to sell to the highest bidder. Mostly, I think it's a matter of who gets the windfall profits.
Not necessarily, but a lot more likely. Corporations raison d'etre is to maximize profits. Governments operate very differently. They MAY still sell to the highest bidder, but already you can see that Venezuela is operating differently. They sell some of their resources to the highest bidder, but they also provide some at a lower price to their own citizens and to their allies at a lower cost.
And when energy is being taken out of the export market and being provided to the people who couldn't afford it at market price it meands less for the USA.
A revolution is happening in South America. It started with Hugo Chavez, and is spreading throughout the region to Argentina, Peru, and Bolivia. And one implication of the revolution is that more energy will stay in South America, and less will be exported to North America.
See Jane Jacobs terrific little book, Systems of Survival: A dialogue on the moral foundations of politics and commerce. She says there are only two sources of wealth: trading or taking. (what about growing?) Anyway, Traders (the world of commerce) and protectors (or "takers") have distinct, internally consistent value systems.
The trader values honesty (keeping contracts), ingenuity, dealing openly with strangers, work ethic,...
The protector (politicians, churches, military,..) value prowess, ostentation (to convince others of your power), largess (ditto), deceiving the "enemy", loyalty,..
so government ownership of resources will have different values and different results. I am not making a value judgment about whether the change will be good or bad.
http://moneycentral.msn.com/content/P149921.asp
http://www.industry.gov.au/assets/documents/itrinternet/gas_supply_demand.pdf#search='natural%20gas% 20%20depletion'
suggests that the gas in Australia's North West will soon be needed in the South East where the population is. I understand the thinking is not LNG shipments around the coastline but connecting to pipelines from depleted fields. It would be strange if one side of the country exported gas while the other side was in crisis.
Canada could end up in this position due to our NAFTA commitments to the US.
With South America wising up, you can see why CAFTA was pushed. We merely wanted free-trade access to the oil and NG! My most any measure, Mexico is a failed state or close to it. Corruption is rampant from Vince Fox on down to the workers in the water departments. Despite the oil, Mexico is about diet-poor. No wonder Mexicans risk life and limb to come here by the millions. People don't risk life and limb en masse for nothing. A failed state and its escape is a great motive!
I always assumed that the US had a neo-colonialist agenda with respect to creating the pan-American free trade zone, but I could never put my finger on it. All about oil after all... Or mostly.
Hence the activism of Chavez in preventing the conclusion of such a treaty, which would have given the US access to South American hydrocarbons at the same price as domestic consumers. Yes Westex, this net-export thing is certainly a key concept. If if turns out that the whole of South America ends up with preferential prices on Venezuelan oil, perhaps the entire continent will no longer be a net exporter?
This story illustrates how this works. The fact that Venezuela is (normally) an oil-exporting country makes the story interesting, but that isn't all that relevant. Any country setting up a contract to receive Russian oil will mean less available for everyone else.
The shocker is that a key exporter has entered the open market not as a vendor but as a buyer. I guess tomorrow we find out that Saudi Aramco is starting to fill a strategic petroleum reserve. I understand Ghawar has characteristics that would make it a great SPR resevoir.
After the management of PDVSA shut down production and sabotaged computer control systems, and after Chavez fired 40,000 PDVSA employees, they have had a very hard and slow time attempting to get production back up to pre-strike levels.
The oil's still there, but they just can't produce it very fast. That's one (of several) reasons that Chavez has wanted oil prices to stay as high as possible : maintain cash-flow while trying to recover production levels.
So once again (just like with 'Global Warming' vs 'Global Climate Change'), we need to be careful with our terminology. Yes, global oil supplies are about to peak, but from time to time (like right now) other factors (refinery capacity, available drilling rigs) will be the proximal cause of supply tightness and high prices.
If we harp constantly about 'Peak Oil', it just gives detractors an opening to deny the concept by claiming that it's "just oil companies refusing to build new refineries in order to drive prices up".
The more obfuscation that we enable, the less we can focus public attention on coming to grips with necessary and ineveitable changes...
Larry
So blaming quite normal problems for production shortfalls obscures the underlying geological issues.
That said, the actual peak in world oil production will occur just before some medium to major supply interruption. By the time that problem is cleared up (and before another one occurs), natural depletion elsewhere will decline more than the recovered oil production.
Like WHT's oil shock model, each non-geological disruption (ie war in Iraq) will extend reserve ammounts and raise the height of the future ceiling a bit from its pre-disruption level. But eventually decline will continue to lower this ceiling eventually.
As you say, by the time the disruption is resolved, the ceiling may have lowered to a point where a fix to the disruption won't result in increasable production.
I think this also applies to the demand side. If there is a major economic recesion just as or after peak kicks in, we will see a lot of head room in the supply side as demand greatly reduces. But by the time the economy might be set to recover, the geological factors will have lowered the ceiling such that this headroom is gone and production to fully complete the recovery is not possible. This would lead to another crash resulting in a ever downward occilation.
I too think the crash will come in a waves of crashes, with each recovery not reaching as "high" (whatever that quite means? Avg standard of living?) as the last.
This also means that the overall timeframe of descent could be much longer than if it were just one long gradual descent, as the Oilshock model shows that even short major disruptions can lock up some serious reserve volume and significantly delay the next supply and demand collision.
-Ptone
A recent Wall Street Journal article on the Iranian situation explained this effect quite nicely:
http://www.theoildrum.com/comments/2006/4/26/02537/9779/90#90
-An act of parliament
-Nationalisation of private companies, or at least a golden share for the UK Gov.
-compensation of said companies
-Voluntary production restrictions.
This would have been possible two decades ago, and Indeed was a serious item (British National Oil Corporation or BNOC). It was scrapped in the 80's.
Whether or not Nationalisation would have led to the development of the latter extensions of field life or alternatively led to stagnation in the low oil price era is something we will never really know.
I dont think Hutton's proposition is valid now.
He did write a pretty decent book though.
V production will likely continue to decline as big oil sours on investing there. If I were a stockholder, I would certainly vote against putting another dime in, regardless of the effect on world supplies. Morales may find similar attitudes following his nationalization of ng fields...
While totoneila's comments may have some weight in Venezuela's case, I think it is more relevant to the USA and Canada (Europe?).
In the case of Venezuela it is called good old politics. When Chavez was in the process of consolidating his power, he was opposed by the Venezuela Oil Industry leaders. They were part of the old guard who were happy with most of the money going to, as a rule, to the lighter skinned part of the middle and upper classes.
So Chavez had to purge some of the top end of management and some of the labor aristocracy within the Venezuela oil industry - hence a decline in production.
i don't think so, we see above...
I imagine if an 'importer' offered to pay 2.1 billion, then Venezuela would be looking somewhere else... It's just a matter of adding up the global supply and demand, and who's willing to pay the price (at least in this instance)
see also: related comment
Curse those little details... about $82/barrel or so depending on when exactly that starts...not so great a deal after all. But why above market, then?
From the MosNews.com link provided by Westexas:
Quote: "Under President Hugo Chavez, PDVSA's oil output has declined by about 60 percent, a trend analysts say has accelerated in the past year because of poor technical management."
I believe it was Matthew R. Simmons that talked about how many key energy employees would be retiring, and how the massive layoffs in the '80& '90s severely impacted the required and extensive training to bring the younger generation up the technical and financial detritus management ladder. Perhaps this decline in Venezuelan output is partly attributable to this whipsawing effect in the petroleum employment history, and will it possibly start showing up in other locales?
Sounds like a statistical endeavor for the always impressive TOD data freaks to dissect.
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
Interesting times indeed! The rising political firestorm over illegal immigration, if events sadly turn tragic, may eclipse the Peakoil Outreach discussion. The US has to be very careful in how the illegal immigrant issue is handled.
My fear is that radical elements on either side may get out of control and do something drastic to rapidly polarize society. If all of a sudden the immigrants cannot safely do their jobs for fear of radical reprisal-- millions of us native born citizens may have to suddenly work the fields, the fish packing plants, and the animal slaughterhouses to keep ourselves from starving. Recall that a Halliburton subsidiary: Kellog, Brown, and Root [KBR] has an open-ended, no bid contract for $385 million to build and maintain 'camps' if required.
Hopefully, cooler heads will prevail. How many of us can slit the throat of a lamb or calf to provide lambchops and veal to the elites?
Bob Shaw in Phx,AZ Are Humans Smarter than Yeast?
Further: the rising cost of fuels depeletes the available quantity of "offshored slave labour" in the poor parts of the world available to we, the rich "slave owners", as these folks are going to need to devote more and more of thier labour to subsistance tasks, leaving less to be taken by us. (By this I mean IMF & world bank "debt repayment" and the continued supply of very cheaply produced offshore goods and services)
And also: The number of "energy slaves" available to us will reduce due to the double effects of post peak output depletion and reduced export/doestic consumption ratios within producing staes due to the demands of their internal demographics and economics as has been well documented here.
Thus we in the european colonised states are faced with finally leaving the age of being the global slave owning class and actually making our own "living" off of our own domestic resources, such as they are.
Now thats a thought which, when it really sinks in, will scare the hell out of people, to actually have to return again to the kind of reality that 3/4 of the global population never left, but that we have not seen ourselves in 2 centuries or so, as the doomers say, its likly to get very bloddy.
I've done that sort of work, and its tough.
The civilian inmate camps to me are interesting. As U.S. citizens begin to fall off the economic wagon (and I can see it coming), these camps might provide them and their families with a place to live and work as a last resort.
Remember when all the Okies fired up the Model Ts and headed for California during the Dust Bowl? Well, that caused a huge social upheaval, and there really is no "California" to escape to today. So freedom camps around the country might not only be voluntary, they might be seen as salvation for millions of people.
Voluntary serfdom might be in our future.
I for one am hoping the outcome of oil depletion brings on that very thing, a return to being forced to actually work for our lives without the crutch that petroleum has become. I say bring it on. I have my doubts that it will turn out to be what any of us can imagine though.
Given the nature of the US finances and just general way we do things these days I have a hunch if oil prices climb quickly enough even say 10-15% a year on top of the real inflation rate thats running at like 8-9% it may be one of the driving forces that may very well break this country. The ruling class has a tenuous hold on things now, it can get out of hand very very quickly.
Like the US military, our country in general may be quite powerful and broad, but it has little depth, no savings, and no stocks of much of anything saved up.
I think it will be quite interesting in say 30 years or so to sit back and compare and contrast how the big industrialized debtor nations handled all this versus how other countries have. So far we have Russia's collapse and Cuba to see what happens when your energy is abruptly shut off. We live in interesting and possibly tragic times.
I took a look at the gas station and gas is up a dime from where it was when I last gassed up on Friday. This is what the average person notices. Depending on business I may have to gas up again tomorrow or not for a week, I wonder how much higher it will be then? It was still only $13 in gas for me to go to Sonoma for the weekend.
I've got the squawk box on Air America and wow is it depressing. Bush, bush, bush, if the guy's such an idiot then why does he hold your attention so much when there are much bigger fish to fry? There was a glowing review of a book called The End of Poverty, that's right, ain't no one gonna be po' no mo'. I guess this is why global poverty is far worse than it was 30 years ago, and those who study such things have found that a slave, yes an honest to goodness slave, is cheaper in inflation-adjusted money than EVER.
What does all this illustrate (geographic oil swaps, LPG shipments)? Increased liquidity/fungibility of fossil fuel supplies. The market correcting imbalances : gas is expensive enough in N America to justify shipping it from Norway, even though Norway is interconnected with the rest of Eurasia.
This sort of activity, surely, is indicative of the futility of trying to "secure" supply? The market rules OK.
http://business.timesonline.co.uk/article/0,,8210-2160509,00.html
End paragraph: ' The Stone Age did not end because it ran out of Stones' (yawn...)
http://msnbc.msn.com/id/12530125/
Dunno if it has anything MosNews doesn't. It is missing the graphs from the FT original (or so it says).
The oil world's new bullies
I wonder which oil experts these would be?
The political animals are starting their panic stampede up on Capital Hill in Washington.
Blood must flow for the surprise surprise increase in gasoline prices. Should it be Republican blood that flows at the November guillotines or Democratic blood? Whom will the people "blame"? The Republicans offer $100 bribes to every man, woman and child in order to save the Republican neck lines from the blade of voter outrage. The Democrats crow about how they voted to raise CAFE standards before they voted against it. Decrease tarrifs on Brazillian ethanol so as to bring in more "energy" to the USA or raise the tarrifs so that the "free markets" in the USA will start making ethanol of their own? Drill ANWR now? Drill offshore Florida and California now? What should we do, what should we do? Oh My. Oh My. Somebody's to blame, but it ain't "us". Blame "them". Kill "them". Don't look at "us". Kill "them". Blame them.
Run and shreik.
Run and shreik.
Oh my.
Oh my.
Intersting times.
The monkeys are on the run.
The lemming herd smells the edge of the ledge.
Panic is here.
when in doubt
run in circles
scream and shout
I would not expect the "powers that be" to wait around to be blamed. From an internal political perspective, there are always some individuals that can be sacrificed. But what is really needed is an external enemy to point to deflect the people's anger. It will need to be something that can be set up quickly. Let's see now......who could it be.....
None of this will rationally solve "The Problem", namely the failure of Oil Extraction rates to keep up with Oil Burn up rates.
When will we start holding hands again and working on a rational solution instead of accelerating our mindless stampede towards the edge of the cliff?
Either we'll do the crazed monkey thing, or we'll vote in/allow an autocratic central government/dictator who will save us from ourselves, at the cost of our freedom.
Of course, as Heinberg points out, "rights" cannot be divorced from resources.
The human animal has never been one to solve geopolitical resource squabbles with anything other than force.
If exporting countries start witholding oil for domestic consumption and it affects the good ole US of A, we will see military action post haste.
Last man standing.
v
Pretty sure Venezuela offered us discounted oil this winter to alleviate stress on poor people....Venezuelans are human aren´t they? Anybody have a # on how many million tons of food th US gives away?
What about the French? Surely it's their fault somehow.
We are now at yet another turning point in human history. The old capitalist and communist systems are no longer sustainable because the resources for sustaining them are drying up. The communists collapsed first because their systems were far more inefficient and corrupt than the capitalist systems. But the capitalist systems are collapsing also.
How do we know that that the Aemrican capitalist system is now collapsing? Because you see American Senators running around like French aristocrats without head on shoulder. They run in confusion not knowing how to make the correct appologist noises for what is going on. If global "free trade" is the golden answer, then how can you vote for raising tariffs against Brazillian ethanol? How can you admit the Brazillians did it right and we did it wrong? How can you vote for bribing American voters with a return of $100 of their own money? How is running the money in circles going to solve anything? Hell, even Joe-6-pack American understands that the $100 rebate is a scam. If the Markets always provide, then why are they not providing now, in our time of need? Something is wrong. And yet the Congressmen, the President, and all his think tank advisers cannot put their fingers on it. They have to frame the question and answers in the context of the capitalist Market System. That system does not allow for the concept of no more cheap & abundant oil and what do we do now?
While in Venezuela they are just giving it away: Cheap Gas Fuels Fracas in Caracas
Given frustration with gas prices, when I mention that scenario, it strikes a chord with motorists. Given how commuters wish to overfly traffic, the Steve Fossett -mobile only adds fantasy points becuse you can drive it to get cheap gas. On a more serious note, when Steve Fossett made his round the world drive, he could have stopped off in Caracas to start the drive itself, using cheap fuel.
Chavez fired 18,000 coup-supporting oil industry management workers in 2002. Isn't it about time they got someone to replace them?
Reported on the Department of Energy website on May 1:
"Traders Expect U.S. Gasoline Imports from Venezuela to Slow to a Trickle as Refinery Problems Continue
According to traders, gasoline shipments from Venezuela to the United States are expected to slow significantly in the coming months if problems at refineries in Venezuela persist. Experts have already expected the Venezuelan import flow to slow due to stricter U.S. fuels standards. Shipments are down to 3 to 4 cargos per month from 10 cargoes per month (about 100,000 b/d) before refinery problems began last year.
Reuters, 16:17 April 28, 2006."
The fact is, when the US is uncermoniously kicked out of Iraq, someone else is going to control all that oil. I'd place my bets on China.
Bottom line is over 300,000 bpd less than peaks last Dec and May.
http://inside.c-spanarchives.org:8080/cspan/cspan.csp?command=dprogram&record=156904838
where the CEO of Exxon and the president of Saudi-Aramco Services were on giving their spin. Their positions are quite predictable. The Exxon guy mentioned peak oil, but only in passing and to suggest that it is wrong.
I only tuned in towards the end, so I only heard Tillerson and the Q/A at the end.
Unfortunately I cannot find a video download of the thing, nor have I found a transcript.
Examples:
Instead of rampant socialism call it indigenous peoples trying to keep some of their own wealth while it exists.
Aging western and Japenese population
Burgeoning, youthful demographics in the emerging world
Religious extremism in Christianity and Islam
Fake Inflation rates (
wealth extraction)wealth extraction)Degenerate currency (=wealth extraction)
Equity Pyramid scheme (=wealth extraction)
Price Tilt to oil producers (
and so on
It makes gold look very attractive. Just remember though that the gold hoards of the dark ages found in the UK were found because whoever hid them never made it back to collect them...
Corporatism (fascism) seems to me to be the natural outcome of Ayn Rand's ideas.
It's been too long since I read "Atlas Shrugged" and some of her other work, but I've always felt that Rand had a kind of blind faith in corporatism.
Of course Rand did sesne some ironies of mass consumerism and the sense of entitlement that develops rather quickly when energy was cheap and abundant. I don't think Rand got the connection between energy and our species, but she was stuck in the old "capitalist versus communist" arguement that always seemed bogus to me.
This chatter about Chavez and the resurgent Latin American socialism seems all too easy to me. None of the leaders or governments are pure or perfect, but it is too easy to draw a caricature of the world that justifies our noble crusades against evil-doers, and incidently grab the oil under their soil.
maybe that makes sense as Rand was writing her own antidote to her soviet youth.
if the reader is not making such a transition from state to individual care, i think the books are less applicable (and more frequently misapplied).
That works out to about $83 a barrel -- a 14% premium to current prices.
Why are they paying so much?
What do you think he believes will be happening in three years that things will get better, i.e. lower prices?