Yet no new record was established for crude production. And just as interestingly, despite record prices, despite a near trebling since $38 per barrel April 2005 prices, production remains flat. And that compares to prices doubling from 2002 to April 2005 yet production increasing by roughly 7 mbpd during that prior doubling in price.
There's evidence there but that's a camel's nose in the tent that some people refuse to acknowledge.
I couldn't agree more. The key issue is CRUDE OIL PRODUCTION. It is logic, that in the case of Peak CRUDE OIL, the production of ethanol, biodiesel et al is increasing.
I also agree. Our economy was built on conventional crude. It is the best measure of sustainable infrastructure.
Unlike the 1973 Oil Embargo where we had a finite shock. Stagflation will slowly suffocate the economy. Without steady growth of energy or efficiency, the economy cannot grow. If China and India are growing, someplace has to shrink. They have cash, we have to borrow. Creates an interesting situation.
BillJames, Thanks for posting that figure to the right. The history behind it is that I had been looking at modeling total liquids production based on discovery data for a few years. But then late last year when I wrote a post on TOD, I had a minor epiphany that the discovery data truly applies to crude only (and not total liquids). In actuality, total liquids has antecedents in natural gas discoveries and other sources, which is not reflected in crude-only discoveries. So what happened is that applying the discovery data fit to a model that included crude reserve growth and extrapolated crude discoveries, we may see a plateauing through this year, as I pegged the real crude oil peak at 2008 and not the earlier pessimistic date I had calculated.
As for your comments on the economic situation, I agree that it will continue to be an interesting situation.
Here is the post that the right-side figure is originally referenced in: http://www.theoildrum.com/node/3287
(If we use the Shell Oil data for discoveries, which includes discoveries of "barrels of oil equivalent", then the total liquids shows a peak at 2010. This shows the importance of understanding what discoveries should be applied to.)
our economy is built on everything. oil is only 30% of our energy. can you show that our total energy is falling? oil is important but so are wages, debt, natural resources, workers and everything else you can think of.
So you don't see any side effect of market-driven, forced carpooling on the average American citizen? Sure it will save a ton of fuel if everyone is carpooling, but if we have gotten to the point where carpooling is seen as a necessity, do you really think people will still be in the mood for that viente latte and that plasma screen and that granite kitchen and that expensive gym membership, etc.? By then they will have effectively stopped consuming as before and there's no denying that our entire economy is built on perpetual growth. As in never-ending.
What I'm saying is that you have the think of the psychological effects of this 'deprivation' on a society that for the most part has never been deprived. I just can't see a future where people are effectively forced to carpool - a huge lifestyle adjustment for 2 income families by the way - while at the same time continue to not just maintain but increase their level of consumer spending to infinity. If our economy isn't growing, it is dying.
By then they will have effectively stopped consuming as before and there's no denying that our entire economy is built on perpetual growth. As in never-ending.
our economy is built on boom and bust cycles. recessions are a part of that which is what you described. the world isn't going to end if we have to car pool.
when we car pool we create communities and friendships, that's what you guys want, right?
Boom and bust, yes. But the overall trend has to be growth. And have the majority of us ever endured a bust so strong where free market dictated - because gas become so expensive - that the only cost-effective way to get to work was to carpool? To me, something on that level would be far outside of what we normally consider a bust cycle.
I'm just focusing on what was said in the above post, that we waste a lot of oil by driving around individually. No doubt about that statement. My argument is that 'driving around individually' is pretty much integral for a normal functioning economy the way we've set it up. If the economics of 'driving around individually' have changed dramatically enough for 'everyone' to carpool, to me that means huge adjustments to our collective psyche and our economy. And perpetual growth isn't in the cards in that case.
JD's work is biased and sloppy. For example, putting natural gas in as an alternative to skew his numbers. We all know natural gas decline will likely closely follow PO.
Another is the 2% decline rate for oil. That's a joke that nobody thinks is funny. The most conservative PO resisters (big oil and CERA) don't even try to claim that. This is an obvious agenda being supported with misleading "facts." In other words, useless.
Yet another is his ignoring that all fuels are not created equal. Even if total energy grows, you will still have problems with interchangeability. E.g., you can't lube an ICE with coal, natural gas, or electricity. You parrot that here by dismissing the point about petroleum being such a high percentage of transportation energy. Like a parrot, you're making a lot of noise but actually communicating anything.
People with agendas... chrissakes... Intelligent points raised by inquiring minds are so much more interesting and so much more useful.
You use the initials "JD" as if everyone knows which poster he is. I can't work it out from your post, and without knowing which poster he/she the main thrust of your comment doesn't make any sense to me since I don't have the context to interpret it, I'm afraid. Maybe many who read your post will know who JD is, but not everyone.
JD's work is biased and sloppy. For example, putting natural gas in as an alternative to skew his numbers. We all know natural gas decline will likely closely follow PO.
It comes fairly directly from analyses by SS, Campbell, and Laherrere, though, so it's not clear that it's as much of a joke as you seem to be assuming.
As he says in the story:
"To those doomers who remain unconvinced: I hereby issue a challenge. Post in the comments. Show me the argument that proves Stuart Staniford, Colin Campbell and Jean Laherrere have got it all wrong about peak oil."
The most conservative PO resisters (big oil and CERA) don't even try to claim that.
You obviously don't understand what they're saying, then.
They're not saying supply is going to decline at 4.5% per year; they're saying that supply would decline at 4.5% per year if no new fields were ever added.
New fields are being added, so the decline rate is less than 4.5% (and, in fact, is less than zero right now, meaning supply is growing).
E.g., you can't lube an ICE with coal, natural gas, or electricity.
Coal and NG can both be turned into liquid fuel via well-known technologies like fischer-tropsch. That you don't know about these technologies doesn't change that.
And, oddly enough, a US lab just came out with a method to generate gasoline from electricity, atmospheric CO2, and water, with - apparently - about 30% efficiency. Not industrial yet, of course, but neither is there a liquid fuels crisis yet.
So don't assume that something can't be done just because you don't know how to do it. Remember: that you believe something does not make it true.
Pit the Elder, You seem to have a forthright stance on much of this analysis. Do you have any numerical analysis on-line somewhere? Something that you have done on your own?
For example, the whole discussion around decline rates certainly could use a good chart. What is the decline rate doing over time? You say it is below zero, meaning the reserve is increasing. But is the decline rate below zero and accelerating upward? In other words, what is the slope of the decline rate at this point in time?
You say it is below zero, meaning the reserve is increasing.
That would be depletion rate, I believe. Decline rate just refers to production; as production has been at record levels for the last few months, the recent decline rate must have been below zero, since production needed to increase to those record levels.
In other words, what is the slope of the decline rate at this point in time?
In my opinion? Far too noisy to meaningfully calculate.
I agree with your analysis BillJames. So much effort is made to discern all the numbers, but really it's quite simple. Crude oil provided the cheap energy for the economy to grow to its current level, and without increasing production to maintain growth, stagflation will suffocate the economy. Right now the only thing holding it together is a plateau of crude production with anything else that can be squeezed to produce fuel in a desperate attempt to supply demand. Trouble is the price of a barrel keeps rising and other liquids will only help bridge the gap between supply and demand for so long, until panic sets in and oil producing country's start hoarding supply for the survival of their own people. Based on a 14 mbd importation dependency, it seems most likely that the US will suffer the most. As the US economy is shocked into retreat, globalization will be rendered as a very short historical footnote to the ascent and decline of modern civilization via cheap oil.
Actually globalization has been around for a long time. Whats different is in the past regions specialized. Tea/China from China etc. Modern engineering practices allowed any region to produce any good give the infrastructure. And cheap transportation aka oil made it feasible to ship goods and more importantly raw materials around the world. This opened up global wage arbitrage. Resource exhaustion makes global wage arbitrage a smaller and smaller part of your costs. Who cares if you can build something for 10 dollars labor cost in China if shipping and raw materials eat up 150 dollars. Also of course the flow of wealth out of the consuming nations to the producing nations cannot continue forever.
So the whole grand scheme falls apart on two counts the consumers run out of cash and the planet runs low on critical raw resources. At this point low wages are no longer the draw the once where. Globalization is complete and we are all at the same level poor hungry and with no resources.
The only other choice we could have made would have been to lower population and focus on quality goods and services. A painting uses about the same amount of materials as a cheap poster. And one solid wood bed that lasts for 100 years uses far less materials than a 100 cheap press board throw away beds. So in a lot of ways the rejection of quality for quantity played a huge role in allowing us to take the wrong direction.
Cheap oil plays a big role here since it can provide quantity but not quality by making transport of large numbers of finished goods from around the world competitive with hand crafted high quality goods.
"Cheap oil plays a big role here since it can provide quantity but not quality by making transport of large numbers of finished goods from around the world competitive with hand crafted high quality goods."
There are "chinoiserie" exhibits at the Royal Ontario Museum; pieces of furniture imported to Europe or North America from China by old-style, wind powered ships. I question whether bulk shipments by big, slow ships will be much impeded even by ridiculous oil prices. Remember the gold-rush era stories about San Francisco shipping laundry to China for cleaning.
Suppose that prices go from $500/tonne to $5000/tonne [I am guessing at numbers here], and we are shipping 0.0005 tonne t-shirts. As prices go up from $0.25 to $2.50 per shirt, we probably won't see any major change.
Things that are huge, heavy, and cheap (bricks and gravel) are localized. But anything with large value-added is likely to remain subject to wage arbitration. For example, modular furniture that can be assembled with screwdrivers is probably highly value-added (over un-worked wood); it seams reasonable that the pieces will continue to be made remotely for local assembly. Ditto the fabric for said furniture. The stuffing may well be added locally.
That said, local transportation costs may be prohibitive. It may be easy to get stuff from Beijing to Ottawa, on a great big slow boat, but impossibly expensive to get stuff from Ottawa to Saskatchewan. So we may find that port cities continue to have cheap inter-continental trade, while landlocked regions do local or do without [until the railroads come back].
Non-rhetorical question to the crowd: what manufactured items have a significant transportation cost which will become prohibitive as oil peaks? For example, pool tables, granite countertops. What other items? (Coal, asphalt)
portland cement. expensive to manufacture and expensive to transport(energy wise). except for the relatively small amount transported by rail.
good luck with transporting portland cement via tall ship.
fly ash will probably be abundant for the near future. maybe adobe will come back in widespread use.
Good point on portland cement--where substitution is possible, it will be done in response to rising prices [adobe, mud huts, etc].
Contrast that with the need for industrial [I] or organic sources [O] of NPK and other trace minerals for photosynthesis--no substitution possible for I-NPK & O-NPK -- unless we can figure out how to make plants thrive on toxic wastes.
Before FF-powered shipping and I-NPK, tall ships readily transported heavy, bulky loads of guano and human bones at enormous relative costs across trans-oceanic distances, especially if one incorporates the expense of the Guano Wars and the other military and piracy forays for resources to support this trade. They had no choice because there were NO SUBSTITUTES until the advent of I-NPK.
Now, with the double whammy depletion of FFs and I-NPK, I expect the eventual global trade of O-NPK to return, but the shipping economics will probably force them to condense this O-NPK as much as possible before they load it into the ships.
Shipping is so cheap that even during the wind-powered era, people were shipping bricks halfway around the world. Hiking in the California coastal mountains, I regularly find 19th century lime kilns made out of bricks imported from Europe. (I can tell where the bricks came from because until recently, standard practice was to stamp the name of the manufacturer on each brick)
I'm not disagreeing. I agree that globalization has been going on for sometime in general limited only by shipping technology. I think you missed the part about moving raw materials. Japan is a perfect example it has effectively no raw materials only as long as the price differential between shipping raw materials and finished goods makes sense do you have manufacturing located based only on wage arbitrage. In general in the past production was local to the resources where possible and only high value goods where shipped. And yes in some cases this means shipping bricks around the world.
To counter your California example if a source of bricks was available locally in the past then it was used. New York for example was built and in many ways possible because of local sources of raw materials. SF was built using local redwoods.
Also California is a bad example because gold rush/rail expansion economics distorted trade patterns.
It was cheaper to ship laundry to China for example because the ships where shipping laborers from China to work in the gold fields and primarily on the rail roads.
In general its best to make some money on both legs of a voyage since returning empty
is a loss. So you always have this underlying economic incentive to fill the ships hold with something.
Right now trade is so distorted that ships return empty to china or filled with scrap.
I think rail will allow the internal regions to continue to prosper from trade but its bilateral trade that makes sense. Not the warped wage arbitrage driven trade underpinned by cheap oil that we have today. Bilateral trade is good and will continue and has existed for thousands of years even if we go back to wind.
I question whether bulk shipments by big, slow ships will be much impeded even by ridiculous oil prices. Remember the gold-rush era stories about San Francisco shipping laundry to China for cleaning.
If one only considers the price of fuel, this may be so. However, one should also consider the total expense of ocean shipping, including the price of building and maintaining the ship, expense of paying and feeding the crew, etc. etc. We may find that this time around things are different in that the total resources required to ship via ocean are more constrained than in the past. Remember stories of Britain running short of wood for ships and how this changed with the exploitation of timber from the 'New' world.
But the reality is that as oil has gone from $10 to $100 the shipping of goods from China to North America has actually increased. It appears likely that eventually a 50" Plasma TV manufactured in China will retail in the USA for less than the cost of a barrel of oil (i.e. the Suburban commuter will pay the same price for the TV or to fill up his SUV). I think EVENTUALLY you guys are correct, but way way down the road (after the entire USA society has been turned upside down).
I had Canadian Atlantic Salmon for dinner last night-here in Honolulu the price was 75% of the price in Toronto-so at $100 oil you can ship it all the way to Hawaii cheaper than you can get it from Halifax to Toronto.I don't think the long distance shipping is going away overnight.
Yes, it's likely to be a long-term thing. But EVENTUALLY could come around quicker than we think. On another thread someone was talking about how the price of steel would rise-- or is already rising-- in part because of the much greater demand from the oil exploration, extraction, refining and delivery business. This comes on top of the increased demand of other energy industries (including the nascent alternative or renewable energy industry), as well as the increased demand from normal global growth (which has been going asymptotic in the past few years). Altogether suggesting much higher shipping costs. I can see where ocean shipping will likely still maintain its relative cheapness vis-a-vis ground shipping, but will rise significantly nevertheless in the overall proportions of the expense of a given product.
I'd like to add one thing. If a lot of our current production is coming from technically enhanced extraction methods then the production curve is not symmetric it rises to a plateau that lasts for a indeterminate amount of time related to the depletion rate the drops of steeply. If our depletion rates are around 10% or so then the plateau period should be about 10 years. If close to 20% then its five years. In any case its between 5-10 years. This year is the earliest we can probably discern if its a big issue or not. But the longer we hover around a plateau the higher the probability that we have a asymmetric production curve. I'd rather see us either increase at a obvious rate or decrease at a obvious rate. If we start to see gentle decreases soon then at least we have hope that the curve will be relatively symmetric and we still have room for technical advances to slow its decline rate. A slow but steady increase is even better. However given the uncertainties in world production a broad peak lasting 4-7 years with a gentle decline is highly probable.
Texas peaked in 1972 and decline was not obvious till 1979-1980. So using this
as a metric its comfortable to assume we may not know for sure how post peak production we look for 7-8 years. I've done the fast collapse scenario a lot of different ways and they all seem to point to a plateau till the end of 2008 and swift and obvious declines setting by 2009. So if we really get the wall of oil expected in 2008 and potentially show increases we may be able to pretty much discount the swift decline theory.
Questions: Memmel, given credit to your theory, is it pertinent to use Texas 1972 - 80 as a reference metric, factoring in that todays technically enhanced extraction methods are much more effective, thus usually precipitating the depletion rate into very steep decline ?
For importing counties, taking into account ELM, wouldn't the effect be just as bad, even if the production decline rate is "gentle" ? Not to mention "hording" effects and precipitous "strategic reserves" built up by several (rich) importing nations ?
Well my point is no I don't think we are going to look like Texas. A big part of Texas's gentle decline was a massive drilling campaign and later the introduction of the technical methods we use today.
I actually use 1990 as a start date for when "technical extraction" had a significant impact on oil production. You can't compare the extraction rates post 1990 to extraction rates before then. We made huge leaps in our ability to extract oil.
This technical extraction issue is on top of ELM or rather I prefer Multi-tiered ELM.
Next although its not been quantified ELM is important because governments control the bulk of the remaining resources and that under the control of oil companies has been extracted using advanced methods. So they are not unrelated.
I think the majority of people still believe in a slow gentle decline. However the only model that works if you assume or ability to extract has increased with time far greater then increases in recovery is a plateau followed by steep declines.
Although its not mentioned that much on the oil drum all the symmetric models did not predict this long plateau. The only way it comes about is with my assumptions that I know of.
Assuming Hubbert was right and a symetric peak should have been in 1995
add in the 8 years delay for advanced extraction and you get
2003.
Next give us 2-3 years because a lot of production was shutin thus delaying peak a bit and we have had some success on increasing recovery and better search ability.
And you get 2005-2006.
Essentially production could start declining steeply any day now.
Every year we don't see increases or gentle declines makes this more likely to be correct. Given the nature of the model i.e a fairly long platuae followed by steep declines and the uncertainty of the data the onset of steep decline is anywhere from 2007-2010 we won't know till after the second year of declines.
Right now I think its started last quarter of 2007 so thats why I'm thinking it will be obvious by 4th quarter 2008 too first half of 2009.
If I've got it right I'm thinking we will end 2008 down by about 2mbd and then 4mbpd by end of 2009. Thence 4-8mpd for several years afterwards till extraction is effectively limited by water handling. The only good news is I think that we can at that point do 30-40mpd for quite some time at a low rate of decline in production since extraction is not limited by technology but the volume of water that needs processing. Once your over about 80% water cut then your extraction rate is limited by the water and your actually getting additional recovery. ELM political factors etc should be added on top of this.
Given the MegaProjects list if we do actually increase production in 2008 then it means that reserve additions are valid and we probably will see a gentle decline. If its another year of plateau then all I know is I've guessed wrong on the year. But ELM itself becomes a factor.
I happen to hate my model but I've not figured out a way to disprove it given the data we have. And the data itself is so poor that trying to get a reasonable guess mathematically is effectively impossible if you question reserve additions. However inclusion of reserve additions results in production still increasing so as of now it seems my assertion that we should throw most of the reserve additions out and attribute current production to simply better extraction methods is true. If you throw them out and assume that extraction efficiency has doubled to tripled with a symmetric peak in 1995 you get our current production profile with some shifting due to shut in production and a double peak despite advances in extraction. With reserve additions included you get the wrong answer. With reserve additions excluded and constant extraction rate you get the wrong answer.
Thank You for this enlightening add-on Memmel. I'm afraid you are in the 'hood' of something here.
The limiting factors regarding oil-extraction are all-over-the-place these days, so predicting next years flow is like predicting .... whatever. The thing is that Govt's must wake up to this now there aint no more time to waste.
PS the Gold rush in '49' lasted for .... eh 6 years ! After that 'done'
The California Gold Rush (1848–1855) began on January 24, 1848, when gold was discovered at Sutter's Mill in Coloma.[1] News of the discovery soon spread, resulting in some 300,000 people coming to California from the rest of the United States and abroad.
"Gold Rush" dynamics differ from oil discoveries mainly in terms of scale and variability. For a given area, the intense prospecting pressure leads to virtually no dispersion in the search space, and the activity collapses quickly after reaching the peak. Look at the curve labeled "no dispersion" in the following chart:
On the other hand, the large volume that oil encompasses and the differing accelerations in prospecting and search rates leads to a smoothed discovery profile which essentially removes the collapse in discoveries.
BTW, mass extinctions caused by intense harvesting, such as in the passenger pigeon era, look very similar to the gold rush dynamics in that the collapse after peak is severe (and ultimately final). There was no variability in the efficiency in harvesting pigeons; it accelerated quickly from guns to explosives, the hunters knew where every last bird was, and the pigeons didn't stand a chance.
I am not saying that we have much to be positive about WRT oil, but that the math modeling behind it differs from gold rush dynamics, see http://www.theoildrum.com/node/2712.
Yet no new record was established for crude production. And just as interestingly, despite record prices, despite a near trebling since $38 per barrel April 2005 prices, production remains flat. And that compares to prices doubling from 2002 to April 2005 yet production increasing by roughly 7 mbpd during that prior doubling in price.
There's evidence there but that's a camel's nose in the tent that some people refuse to acknowledge.
I couldn't agree more. The key issue is CRUDE OIL PRODUCTION. It is logic, that in the case of Peak CRUDE OIL, the production of ethanol, biodiesel et al is increasing.
I also agree. Our economy was built on conventional crude. It is the best measure of sustainable infrastructure.
Unlike the 1973 Oil Embargo where we had a finite shock. Stagflation will slowly suffocate the economy. Without steady growth of energy or efficiency, the economy cannot grow. If China and India are growing, someplace has to shrink. They have cash, we have to borrow. Creates an interesting situation.
BillJames, Thanks for posting that figure to the right. The history behind it is that I had been looking at modeling total liquids production based on discovery data for a few years. But then late last year when I wrote a post on TOD, I had a minor epiphany that the discovery data truly applies to crude only (and not total liquids). In actuality, total liquids has antecedents in natural gas discoveries and other sources, which is not reflected in crude-only discoveries. So what happened is that applying the discovery data fit to a model that included crude reserve growth and extrapolated crude discoveries, we may see a plateauing through this year, as I pegged the real crude oil peak at 2008 and not the earlier pessimistic date I had calculated.
As for your comments on the economic situation, I agree that it will continue to be an interesting situation.
Here is the post that the right-side figure is originally referenced in:
http://www.theoildrum.com/node/3287
(If we use the Shell Oil data for discoveries, which includes discoveries of "barrels of oil equivalent", then the total liquids shows a peak at 2010. This shows the importance of understanding what discoveries should be applied to.)
our economy is built on everything. oil is only 30% of our energy. can you show that our total energy is falling? oil is important but so are wages, debt, natural resources, workers and everything else you can think of.
90% of the energy for transportation comes from oil.
Best wishes for an economy without transportation.
"90% of the energy for transportation comes from oil."
we waste tons of oil getting to work with one driver in one huge car remember? tons of efficiency to be gained is the flip side of waste.
besides, that we won't run out of oil tomorrow. you also ignore using electricity for powering cars.
328. PEAK LIQUIDS ≠ PEAK ENERGY
http://peakoildebunked.blogspot.com/2008/01/328-peak-liquids-peak-energy...
thanks JD!
So you don't see any side effect of market-driven, forced carpooling on the average American citizen? Sure it will save a ton of fuel if everyone is carpooling, but if we have gotten to the point where carpooling is seen as a necessity, do you really think people will still be in the mood for that viente latte and that plasma screen and that granite kitchen and that expensive gym membership, etc.? By then they will have effectively stopped consuming as before and there's no denying that our entire economy is built on perpetual growth. As in never-ending.
What I'm saying is that you have the think of the psychological effects of this 'deprivation' on a society that for the most part has never been deprived. I just can't see a future where people are effectively forced to carpool - a huge lifestyle adjustment for 2 income families by the way - while at the same time continue to not just maintain but increase their level of consumer spending to infinity. If our economy isn't growing, it is dying.
our economy is built on boom and bust cycles. recessions are a part of that which is what you described. the world isn't going to end if we have to car pool.
when we car pool we create communities and friendships, that's what you guys want, right?
http://en.wikipedia.org/wiki/Fallacy_of_many_questions
Boom and bust, yes. But the overall trend has to be growth. And have the majority of us ever endured a bust so strong where free market dictated - because gas become so expensive - that the only cost-effective way to get to work was to carpool? To me, something on that level would be far outside of what we normally consider a bust cycle.
I'm just focusing on what was said in the above post, that we waste a lot of oil by driving around individually. No doubt about that statement. My argument is that 'driving around individually' is pretty much integral for a normal functioning economy the way we've set it up. If the economics of 'driving around individually' have changed dramatically enough for 'everyone' to carpool, to me that means huge adjustments to our collective psyche and our economy. And perpetual growth isn't in the cards in that case.
JD's work is biased and sloppy. For example, putting natural gas in as an alternative to skew his numbers. We all know natural gas decline will likely closely follow PO.
Another is the 2% decline rate for oil. That's a joke that nobody thinks is funny. The most conservative PO resisters (big oil and CERA) don't even try to claim that. This is an obvious agenda being supported with misleading "facts." In other words, useless.
Yet another is his ignoring that all fuels are not created equal. Even if total energy grows, you will still have problems with interchangeability. E.g., you can't lube an ICE with coal, natural gas, or electricity. You parrot that here by dismissing the point about petroleum being such a high percentage of transportation energy. Like a parrot, you're making a lot of noise but actually communicating anything.
People with agendas... chrissakes... Intelligent points raised by inquiring minds are so much more interesting and so much more useful.
Cheers
You use the initials "JD" as if everyone knows which poster he is. I can't work it out from your post, and without knowing which poster he/she the main thrust of your comment doesn't make any sense to me since I don't have the context to interpret it, I'm afraid. Maybe many who read your post will know who JD is, but not everyone.
http://www.theoildrum.com/user/JD
http://www.nizkor.org/features/fallacies/appeal-to-popularity.html
It's both ironic and funny that you launch straight into a fallacy to "prove" JD's work is biased and sloppy.
Ironic, funny, and rather telling.
Refute his argument, then. It's here.
It comes fairly directly from analyses by SS, Campbell, and Laherrere, though, so it's not clear that it's as much of a joke as you seem to be assuming.
As he says in the story:
"To those doomers who remain unconvinced: I hereby issue a challenge. Post in the comments. Show me the argument that proves Stuart Staniford, Colin Campbell and Jean Laherrere have got it all wrong about peak oil."
You obviously don't understand what they're saying, then.
They're not saying supply is going to decline at 4.5% per year; they're saying that supply would decline at 4.5% per year if no new fields were ever added.
New fields are being added, so the decline rate is less than 4.5% (and, in fact, is less than zero right now, meaning supply is growing).
Coal and NG can both be turned into liquid fuel via well-known technologies like fischer-tropsch. That you don't know about these technologies doesn't change that.
And, oddly enough, a US lab just came out with a method to generate gasoline from electricity, atmospheric CO2, and water, with - apparently - about 30% efficiency. Not industrial yet, of course, but neither is there a liquid fuels crisis yet.
So don't assume that something can't be done just because you don't know how to do it. Remember: that you believe something does not make it true.
Pit the Elder, You seem to have a forthright stance on much of this analysis. Do you have any numerical analysis on-line somewhere? Something that you have done on your own?
For example, the whole discussion around decline rates certainly could use a good chart. What is the decline rate doing over time? You say it is below zero, meaning the reserve is increasing. But is the decline rate below zero and accelerating upward? In other words, what is the slope of the decline rate at this point in time?
That would be depletion rate, I believe. Decline rate just refers to production; as production has been at record levels for the last few months, the recent decline rate must have been below zero, since production needed to increase to those record levels.
In my opinion? Far too noisy to meaningfully calculate.
I agree with your analysis BillJames. So much effort is made to discern all the numbers, but really it's quite simple. Crude oil provided the cheap energy for the economy to grow to its current level, and without increasing production to maintain growth, stagflation will suffocate the economy. Right now the only thing holding it together is a plateau of crude production with anything else that can be squeezed to produce fuel in a desperate attempt to supply demand. Trouble is the price of a barrel keeps rising and other liquids will only help bridge the gap between supply and demand for so long, until panic sets in and oil producing country's start hoarding supply for the survival of their own people. Based on a 14 mbd importation dependency, it seems most likely that the US will suffer the most. As the US economy is shocked into retreat, globalization will be rendered as a very short historical footnote to the ascent and decline of modern civilization via cheap oil.
Actually globalization has been around for a long time. Whats different is in the past regions specialized. Tea/China from China etc. Modern engineering practices allowed any region to produce any good give the infrastructure. And cheap transportation aka oil made it feasible to ship goods and more importantly raw materials around the world. This opened up global wage arbitrage. Resource exhaustion makes global wage arbitrage a smaller and smaller part of your costs. Who cares if you can build something for 10 dollars labor cost in China if shipping and raw materials eat up 150 dollars. Also of course the flow of wealth out of the consuming nations to the producing nations cannot continue forever.
So the whole grand scheme falls apart on two counts the consumers run out of cash and the planet runs low on critical raw resources. At this point low wages are no longer the draw the once where. Globalization is complete and we are all at the same level poor hungry and with no resources.
The only other choice we could have made would have been to lower population and focus on quality goods and services. A painting uses about the same amount of materials as a cheap poster. And one solid wood bed that lasts for 100 years uses far less materials than a 100 cheap press board throw away beds. So in a lot of ways the rejection of quality for quantity played a huge role in allowing us to take the wrong direction.
Cheap oil plays a big role here since it can provide quantity but not quality by making transport of large numbers of finished goods from around the world competitive with hand crafted high quality goods.
"Cheap oil plays a big role here since it can provide quantity but not quality by making transport of large numbers of finished goods from around the world competitive with hand crafted high quality goods."
There are "chinoiserie" exhibits at the Royal Ontario Museum; pieces of furniture imported to Europe or North America from China by old-style, wind powered ships. I question whether bulk shipments by big, slow ships will be much impeded even by ridiculous oil prices. Remember the gold-rush era stories about San Francisco shipping laundry to China for cleaning.
Suppose that prices go from $500/tonne to $5000/tonne [I am guessing at numbers here], and we are shipping 0.0005 tonne t-shirts. As prices go up from $0.25 to $2.50 per shirt, we probably won't see any major change.
Things that are huge, heavy, and cheap (bricks and gravel) are localized. But anything with large value-added is likely to remain subject to wage arbitration. For example, modular furniture that can be assembled with screwdrivers is probably highly value-added (over un-worked wood); it seams reasonable that the pieces will continue to be made remotely for local assembly. Ditto the fabric for said furniture. The stuffing may well be added locally.
That said, local transportation costs may be prohibitive. It may be easy to get stuff from Beijing to Ottawa, on a great big slow boat, but impossibly expensive to get stuff from Ottawa to Saskatchewan. So we may find that port cities continue to have cheap inter-continental trade, while landlocked regions do local or do without [until the railroads come back].
Non-rhetorical question to the crowd: what manufactured items have a significant transportation cost which will become prohibitive as oil peaks? For example, pool tables, granite countertops. What other items? (Coal, asphalt)
portland cement. expensive to manufacture and expensive to transport(energy wise). except for the relatively small amount transported by rail.
good luck with transporting portland cement via tall ship.
fly ash will probably be abundant for the near future. maybe adobe will come back in widespread use.
Hello Elwoodelmore,
Good point on portland cement--where substitution is possible, it will be done in response to rising prices [adobe, mud huts, etc].
Contrast that with the need for industrial [I] or organic sources [O] of NPK and other trace minerals for photosynthesis--no substitution possible for I-NPK & O-NPK -- unless we can figure out how to make plants thrive on toxic wastes.
Before FF-powered shipping and I-NPK, tall ships readily transported heavy, bulky loads of guano and human bones at enormous relative costs across trans-oceanic distances, especially if one incorporates the expense of the Guano Wars and the other military and piracy forays for resources to support this trade. They had no choice because there were NO SUBSTITUTES until the advent of I-NPK.
Now, with the double whammy depletion of FFs and I-NPK, I expect the eventual global trade of O-NPK to return, but the shipping economics will probably force them to condense this O-NPK as much as possible before they load it into the ships.
Bob Shaw in Phx,Az Are Humans Smarter than Yeast?
Shipping is so cheap that even during the wind-powered era, people were shipping bricks halfway around the world. Hiking in the California coastal mountains, I regularly find 19th century lime kilns made out of bricks imported from Europe. (I can tell where the bricks came from because until recently, standard practice was to stamp the name of the manufacturer on each brick)
I'm not disagreeing. I agree that globalization has been going on for sometime in general limited only by shipping technology. I think you missed the part about moving raw materials. Japan is a perfect example it has effectively no raw materials only as long as the price differential between shipping raw materials and finished goods makes sense do you have manufacturing located based only on wage arbitrage. In general in the past production was local to the resources where possible and only high value goods where shipped. And yes in some cases this means shipping bricks around the world.
To counter your California example if a source of bricks was available locally in the past then it was used. New York for example was built and in many ways possible because of local sources of raw materials. SF was built using local redwoods.
Also California is a bad example because gold rush/rail expansion economics distorted trade patterns.
It was cheaper to ship laundry to China for example because the ships where shipping laborers from China to work in the gold fields and primarily on the rail roads.
In general its best to make some money on both legs of a voyage since returning empty
is a loss. So you always have this underlying economic incentive to fill the ships hold with something.
Right now trade is so distorted that ships return empty to china or filled with scrap.
I think rail will allow the internal regions to continue to prosper from trade but its bilateral trade that makes sense. Not the warped wage arbitrage driven trade underpinned by cheap oil that we have today. Bilateral trade is good and will continue and has existed for thousands of years even if we go back to wind.
If one only considers the price of fuel, this may be so. However, one should also consider the total expense of ocean shipping, including the price of building and maintaining the ship, expense of paying and feeding the crew, etc. etc. We may find that this time around things are different in that the total resources required to ship via ocean are more constrained than in the past. Remember stories of Britain running short of wood for ships and how this changed with the exploitation of timber from the 'New' world.
But the reality is that as oil has gone from $10 to $100 the shipping of goods from China to North America has actually increased. It appears likely that eventually a 50" Plasma TV manufactured in China will retail in the USA for less than the cost of a barrel of oil (i.e. the Suburban commuter will pay the same price for the TV or to fill up his SUV). I think EVENTUALLY you guys are correct, but way way down the road (after the entire USA society has been turned upside down).
wherever it costs the least is where we will make stuff. the only reason we produce tvs in china is that it costs less.
I had Canadian Atlantic Salmon for dinner last night-here in Honolulu the price was 75% of the price in Toronto-so at $100 oil you can ship it all the way to Hawaii cheaper than you can get it from Halifax to Toronto.I don't think the long distance shipping is going away overnight.
Yes, it's likely to be a long-term thing. But EVENTUALLY could come around quicker than we think. On another thread someone was talking about how the price of steel would rise-- or is already rising-- in part because of the much greater demand from the oil exploration, extraction, refining and delivery business. This comes on top of the increased demand of other energy industries (including the nascent alternative or renewable energy industry), as well as the increased demand from normal global growth (which has been going asymptotic in the past few years). Altogether suggesting much higher shipping costs. I can see where ocean shipping will likely still maintain its relative cheapness vis-a-vis ground shipping, but will rise significantly nevertheless in the overall proportions of the expense of a given product.
I'd like to add one thing. If a lot of our current production is coming from technically enhanced extraction methods then the production curve is not symmetric it rises to a plateau that lasts for a indeterminate amount of time related to the depletion rate the drops of steeply. If our depletion rates are around 10% or so then the plateau period should be about 10 years. If close to 20% then its five years. In any case its between 5-10 years. This year is the earliest we can probably discern if its a big issue or not. But the longer we hover around a plateau the higher the probability that we have a asymmetric production curve. I'd rather see us either increase at a obvious rate or decrease at a obvious rate. If we start to see gentle decreases soon then at least we have hope that the curve will be relatively symmetric and we still have room for technical advances to slow its decline rate. A slow but steady increase is even better. However given the uncertainties in world production a broad peak lasting 4-7 years with a gentle decline is highly probable.
Texas peaked in 1972 and decline was not obvious till 1979-1980. So using this
as a metric its comfortable to assume we may not know for sure how post peak production we look for 7-8 years. I've done the fast collapse scenario a lot of different ways and they all seem to point to a plateau till the end of 2008 and swift and obvious declines setting by 2009. So if we really get the wall of oil expected in 2008 and potentially show increases we may be able to pretty much discount the swift decline theory.
Plateau is bad.
Questions: Memmel, given credit to your theory, is it pertinent to use Texas 1972 - 80 as a reference metric, factoring in that todays technically enhanced extraction methods are much more effective, thus usually precipitating the depletion rate into very steep decline ?
For importing counties, taking into account ELM, wouldn't the effect be just as bad, even if the production decline rate is "gentle" ? Not to mention "hording" effects and precipitous "strategic reserves" built up by several (rich) importing nations ?
Well my point is no I don't think we are going to look like Texas. A big part of Texas's gentle decline was a massive drilling campaign and later the introduction of the technical methods we use today.
I actually use 1990 as a start date for when "technical extraction" had a significant impact on oil production. You can't compare the extraction rates post 1990 to extraction rates before then. We made huge leaps in our ability to extract oil.
This technical extraction issue is on top of ELM or rather I prefer Multi-tiered ELM.
Next although its not been quantified ELM is important because governments control the bulk of the remaining resources and that under the control of oil companies has been extracted using advanced methods. So they are not unrelated.
I think the majority of people still believe in a slow gentle decline. However the only model that works if you assume or ability to extract has increased with time far greater then increases in recovery is a plateau followed by steep declines.
Although its not mentioned that much on the oil drum all the symmetric models did not predict this long plateau. The only way it comes about is with my assumptions that I know of.
Read both of these.
http://www.touchbriefings.com/pdf/2590/Ferro.pdf
http://mobjectivist.blogspot.com/2005/11/can-we-delay-peak-by-upping-ext...
Assuming Hubbert was right and a symetric peak should have been in 1995
add in the 8 years delay for advanced extraction and you get
2003.
Next give us 2-3 years because a lot of production was shutin thus delaying peak a bit and we have had some success on increasing recovery and better search ability.
And you get 2005-2006.
Essentially production could start declining steeply any day now.
Every year we don't see increases or gentle declines makes this more likely to be correct. Given the nature of the model i.e a fairly long platuae followed by steep declines and the uncertainty of the data the onset of steep decline is anywhere from 2007-2010 we won't know till after the second year of declines.
Right now I think its started last quarter of 2007 so thats why I'm thinking it will be obvious by 4th quarter 2008 too first half of 2009.
If I've got it right I'm thinking we will end 2008 down by about 2mbd and then 4mbpd by end of 2009. Thence 4-8mpd for several years afterwards till extraction is effectively limited by water handling. The only good news is I think that we can at that point do 30-40mpd for quite some time at a low rate of decline in production since extraction is not limited by technology but the volume of water that needs processing. Once your over about 80% water cut then your extraction rate is limited by the water and your actually getting additional recovery. ELM political factors etc should be added on top of this.
Given the MegaProjects list if we do actually increase production in 2008 then it means that reserve additions are valid and we probably will see a gentle decline. If its another year of plateau then all I know is I've guessed wrong on the year. But ELM itself becomes a factor.
I happen to hate my model but I've not figured out a way to disprove it given the data we have. And the data itself is so poor that trying to get a reasonable guess mathematically is effectively impossible if you question reserve additions. However inclusion of reserve additions results in production still increasing so as of now it seems my assertion that we should throw most of the reserve additions out and attribute current production to simply better extraction methods is true. If you throw them out and assume that extraction efficiency has doubled to tripled with a symmetric peak in 1995 you get our current production profile with some shifting due to shut in production and a double peak despite advances in extraction. With reserve additions included you get the wrong answer. With reserve additions excluded and constant extraction rate you get the wrong answer.
Humm.., after much pondering, and IMHO, you nailed it! (given the data around)
Just wondering what the rest of the gang has to say ?
Any important points missing ?
Can this model be refined with more "objective" data around ?
Seems to me that this could have tremendous impact on those decision makers and policy makers who follow the match!
Thank You for this enlightening add-on Memmel. I'm afraid you are in the 'hood' of something here.
The limiting factors regarding oil-extraction are all-over-the-place these days, so predicting next years flow is like predicting .... whatever. The thing is that Govt's must wake up to this now there aint no more time to waste.
PS the Gold rush in '49' lasted for .... eh 6 years ! After that 'done'
The California Gold Rush (1848–1855) began on January 24, 1848, when gold was discovered at Sutter's Mill in Coloma.[1] News of the discovery soon spread, resulting in some 300,000 people coming to California from the rest of the United States and abroad.
"Gold Rush" dynamics differ from oil discoveries mainly in terms of scale and variability. For a given area, the intense prospecting pressure leads to virtually no dispersion in the search space, and the activity collapses quickly after reaching the peak. Look at the curve labeled "no dispersion" in the following chart:
On the other hand, the large volume that oil encompasses and the differing accelerations in prospecting and search rates leads to a smoothed discovery profile which essentially removes the collapse in discoveries.
BTW, mass extinctions caused by intense harvesting, such as in the passenger pigeon era, look very similar to the gold rush dynamics in that the collapse after peak is severe (and ultimately final). There was no variability in the efficiency in harvesting pigeons; it accelerated quickly from guns to explosives, the hunters knew where every last bird was, and the pigeons didn't stand a chance.
I am not saying that we have much to be positive about WRT oil, but that the math modeling behind it differs from gold rush dynamics, see http://www.theoildrum.com/node/2712.
Well did I say otherwise?
That mentioning of the gold-rush was just a philosophical anecdote, serving as a reminder… of something..
As opposed to oil/fossil-extraction and combustion, that gold from 1949 is still around and kicking and shining for you WebHubbleTelescope.
I think one day I may have to look into your linked guest-post, looks educational .thx
It gave me a chance to do some expository writing. That's what makes this interesting. These topics are all related in potentially explainable ways.