This is a guest post by George C. Lordos, of Nicosia, Cyprus, known as Lumina at The Oil Drum. He has degrees in Philosophy, Politics and Economics from Christ Church College at Oxford University and in Business Administration from the MIT Sloan School of Management, where he specialized on strategy, finance and system dynamics. George has business interests as a Principal/Chairman in food trading, energy efficiency, renewable energy and information technology. He also makes a hobby of blogging about sustainability, energy and finance. George's blog is at baobab2050.org.

The Export Land Model of forecasting future oil supplies available for sale to oil importing economies, which as far as I know was first presented at the 2007 ASPO-USA conference by its authors Sam Foucher and Jeffrey J. Brown, takes my “Cassandra Prize” for its importance and for the deafening silence with which stakeholders have been reacting to it, despite the mainstream media giving it some coverage.

In this post, I use a different way of grouping countries to confirm key insights of the Export Land Model.

It is quite common to hear experts explain that the current tight oil markets are due to “above-ground factors,” and not a result of a global peaking in oil production. In reality, geological peaking is driving the geopolitical events that constitute the most significant “above-ground factors” such as the chaos in Iraq and Nigeria, the nationalization in Venezuela and Bolivia, etc. Geological peaking spawns positive feedback loops within the geopolitical system. Critically, these loops are not separable from the geological events—they are part of the broader “system” of Peak Oil.

I normally try to be a “Good News” kind of guy, but today I bring bad tidings. Despite my previous claims that Australia is The Place To Be, we are in for some tough times here.

TOD has featured the Export Land Model (ELM) on several occasions (http://www.theoildrum.com/node/3018 ). A summary can also be found in Wikipedia.

The concept is deceptively simple:
Oil producing countries service internal markets first, and then export their surplus. Observations of oil exporting countries show that their internal markets continue to grow rapidly even after the peak. So their exports are hit by 2 factors - declining production and increasing domestic consumption. As a result, their export capacity drops with unexpected rapidity.

An Example: Precipitous Decline In Net Exports From Indonesia.
Source: Matt Mushalik, based on data from http://tonto.eia.doe.gov/country/index.cfm