@Thanks Ace for your insightful comment on NGL,

My guess is that OPEC's lower crude production has forced associated NGL production down. But that's just a guess.

More and more of the gas we are pumping is non-associated gas, and that seems to be drier gas, based on what Rune has said. Thus, the ratio to of natural gas plant liquids to natural gas production should be decreasing over time.

Also, of the two plants you mention, only one (Hawiyah) is currently on line with a capacity of 0.31 mbd. We don't know how late in 2008 it was added, or what percentage of capacity it is really at.

Oops, I almost forgot to credit LATOCer Roccman for posting the link.

http://www.warsocialism.com/olduvai.htm

I get address not found. Bad link?

Olduvai Theory: Toward Re-Equalizing the World Standard of Living

It's kind of misleading to keep re-branding "Olduvai Theory" the way he does. It was initially a very specific prediction about per capita energy consumption (that was also statistically invalid, but that's beside the point), whereas now it's about "equalizing standard of living".

Unfortunately, though, what he has not changed is a tendency to make unfounded assertions. For example:

"“Raising the quality of life,” means releasing stress, reducing crowding, reducing pollution, alleviating hunger, and treating ill health. But these pressures are exactly the sources of concern and actions that will control total population to keep it within the bounds of the fixed world within we live. If the pressures are relaxed, so is the concern about how we impinge on the environment. Population will then rise further until the pressures reappear with an intensity that can no longer be relieved."

That's a bold claim to make, but he offers no evidence to support it. Indeed, available evidence suggests that the claim is wrong; demographic transition has taken much of the world from high to low (or negative) population growth not despite higher standard of living but because of it. This is exactly the opposite of what Duncan is asserting as true and using as one of the cornerstones of his argument.

Like all past iterations of Duncan's argument, this one reads as an argument being made to fit a desired outcome. Indeed, that seems to be the main constant of his "Olduvai Theory": he has a desired conclusion in mind, and he keeps trying out different numbers and arguments in the hopes of finding some that support his conclusion. It's a deeply unscientific approach.

@Cslater8

You are basing this on the selective set of graphs in the article, not on the full assortment of 129 charts in the oilwatch monthly. There are many 'smaller' producers (below 1 million b/d) which face continued declining production including Argentina, Oman, Yemen, Syria, Indonesia, and Denmark. As well as some larger producers United Kingdom, Norway.

Also production in China and Iraq has not increased since the beginning of 2008. The recent uptick in Chinese production is due to IEA's common overestimate of the latest month for China (shown in Oilwatch Monthly's April 2008 editorial).

It is possible that there will be one more peak higher than the current july 2008 one, but it seems to be increasingly unlikely.

Read the entire report. 64 plus countries are in terminal decline. Saudi will never make 12.5 mbpd. When the world economy recovers, we will see the true picture of who can really produce oil. Now is a good time to get off of oil wherever possible. We have about 2 - 3 years left before the big decline starts. Since a lot of oil projects have been cancelled or put on hold, it may come sooner rather than later.

There is absolutely nothing wrong with the ELM model from a logical point of view. If by throwing cold water on ELM that you are implying that it acts as a sort of "zero-sum" analysis of the situation, you may be correct. As oil gets exchanged between nations, things do indeed balance out. So, I think it is healthy to question whether ELM adds a lot to understanding the aggregate global oil production situation. Yet, ELM clearly has huge implications for the socio-political interactions between oil-producing and oil-consuming nations. You can't throw cold water on that aspect of ELM. I think WT places a big emphasis of that role of the model.

The Crude Oil (EIA) data is the oil data. IEA doesn't give data on that basis, so Rembrandt uses what is available.

The site is about "Energy and our Future", not "Oil" only.

Took me about 90 seconds. Actually a bit longer because Imageshack is on the fritz, you get the idea.

I don't think that export graph is, necessarily, all that strange.

1) As the "exporters'" economy slows they will have more to export (if their economy is slowing faster than their fields are depleting,) and

2) Brazil, and Indonesia are steadily increasing their biofuels exports.

Edit: Also, Saudi Arabia has increased its NGLs production by somewhere between .3 and .6 mbpd. This should, I would think, give them more oil to export.

I don't agree with the dollar vs euro graph for oil. Not that its not useful but I think the dynamics are to complex to be captured in a simple graph.

The question is are people holding dollars now paying more for oil than those that hold reserves in Euros ?

First and foremost you need to do the same thing with just Brent crude its real oil priced in Euros. Next you have various transportation costs that are non trivial and also of course different mixes of sources for the imported oil to various regions with different spreads vs the market price. Blending hides all of these factors and they are not small. The US used to have significant buying power despite weakening its dollar because of all the local importers around it. Mexico, Canada, Venezuela etc.

Whats interesting is if the dollar is weakening then at least for oil your generally better off most of the time holding your cash reserves in Euros and converting at the last minute.

The Euro is a strong enough currency that it has started to counter act the power of the petrodollar. Now of course if your converting you holding into Euros then this by definition puts downward pressure on the dollar as your using the Euro as a reserve currency. The Middle East actually uses more Euros than dollars for its imports exports so its a defacto member of the Eurozone. They are also generally more interested in Euros than dollars. Thus the dollar tends to get pushed out rudely when it weakens vs the Euro.

The reverse happens when the dollar is rising vs the Euro and you tend to get the Euro pushed down. So you also need the Forex exchange graph. And of course you can't leave out the Yen or other trading currencies. And these days you have no clue what kind of synthetic protection contract has been written to hedge forex changes.

Also from a macro economic view the relative strength of the Euro results in cheaper imports but more expensive exports vs the dollar thus its not clear if its and overall economic winner. Exporting economies generally want a weak currency even though it drives up import prices in exchange for increasing exports.

In general the EU has a tighter fiscal policy than the US thus when commodity prices start increasing what we tend to see is the Euro strengthening as its the one globally traded currency that acts more like a store of wealth vs the national currencies.
This is not because the Euro is great but because its a collective currency with its member nations having varying economic systems they simply lag in the race to devalue fiat currencies. By not being as fast as the sovereign nations with the printing press they get stuck as the defacto reserve currency when the presses start rolling and it tends to magnify overtime.

Rising oil prices tend to increase the velocity of money and ignite the implicit inflation that been caused by all the monetary inflation. The changes in flow of capitol are large enough that rising oil and even commodity prices can cause inflation even as the overall economy remains weak. I actually believe this will be the mechanism which will work to give the world the pains of inflation without the benefits.

Whats really interesting for the Eurozone is its going to either be forced to weaken the Euro significantly and potentially cause internal inflation or it will have to develop more internal trade at the expense of lowering trade with the US and China.
I'd not be surprised to see the Eurozone turn inward and allow the Euro to strengthen and focus on fostering trade amongst Eurozone members and defacto members like the Middle East and Russia. It makes sense for Europe to begin breaking the ties to the US and leverage the growing strength of the Euro to localize its economy.

@Gail,

As outlined in the Oilwatch itself, the exports graph is not based on a data source but computed by subtracting consumption from production in oil producing countries and counting the remainder as exports.

I wonder if the increased militant action is an effect, rather than a cause, of the lower production. With lower production, the government has less money (doubly so with the lower price). Not much money filtered back to the people, but what little did is now lower.

One aspect of peak that I have been toying with is the idea that the discovery peak will have occurred at a fixed point independent of the grade of the crude oil. When prospectors discover oil there is really no way that they can distinguish between the quality of oil a priori so that all this goes into the same bucket.

However as we figured out how to get liquids from alternate sources, prospectors started to concentrate on other markers and the discovery peak for these alternate gets pushed further into the future from the crude peak.

When these two sources of liquid get put together, the crude component hits peak sooner, partly due to the earlier discovery peak and also due to better efficiency of extraction (i.e. higher decline rates). The alternate liquids will have a very broad peak that gets pushed into the future. This is partly due to the lower extraction rate and due to the discoveries generally happening later.

Bottom line is the first peak we have seen is the most desirable and most easily extractable crude putting it definitely around the year 2005. All the subsequent arguments about pinning down a peak concern possible plateauing and gaining lost ground by using the alternate sources. In either case, higher extraction rates seem a necessity to prevent us from declining too fast.

The '05 date is *temporarily* supplanted, but I wouldn't bet against it yet. Crude oil production on its own (not including other liquids) has a new peak in 2008 (check out the chart posted above by the dude), though I am hesitant to say that's a new peak until the EIA finalizes their data. There have been too many down-graded revisions in the last two years for me to quickly trust their new production numbers...

Is it true that some still hold that peak oil occurred in 2005 (Deffeyes?) I know that different measures include and exclude different liquids. Would someone succinctly summarize current (though possibly conflicting) opinions are on what has peaked and when for the non-oil person? Maybe it's not such a small request.

Dave, My "Beyond Oil" book by Deffeyes is in deep storage, but here is my recollection. Deffeyes used a variation of the logistic function to estimate the world URR. (this method works reasonably well for smaller, geographically homogenous regions). In it he calculated world URR of 2.1? trillion barrels. He then calculated how much had been used and interpolated we crossed 50% of that amount on Dec 16, 2005 (somewhat tongue in cheek). Therefore Deffeyes was never forecasting the month or year that oil production would peak and subsequently decline, but when we would have used 1/2 of the recoverable. Logic might suggest these happen at the same time, but technology and high prices probably made the 50% URR point come before the maximum production month/year.

From the (very old) post Peak Oil -Whom to Believe CERAiously:

REASON #1 - THE PHRASE "PEAK OIL" MEANS DIFFERENT THINGS TO DIFFERENT PEOPLE

When someone says 'oil has already peaked' or 'peak isn't until 2020', what do they mean? Peak Oil can (and will) have many definitions. It would benefit policy debates and discussions if there were a universal, agreed-upon definition. The most common is the year in which global crude oil production reaches its maximum sustained level, followed by a permanent decline. Some (Ken Deffeyes) define Peak as the date when 50% of the world's oil has been used irrespective of the annual flow rate (presumably, we could have used 50%+ of our oil and still have rising production if technology is allowing us to borrow from what would have been a bell shaped curve.)

Other definitions differ in what is included as 'oil'. The most restrictive includes only oil graded as "Light Sweet". More common definitions include condensate and Natural Gas Plant Liquids (NGPL). Still broader definitions include the heavy oils, the Orinoco oil sands, and the Alberta tar sands. And the broadest measure of 'what is oil' might include corn and sugarcane turned to ethanol, palm nuts turned to biodiesel, and coal turned to diesel fuel. This is referred to as "All liquids" and is what is commonly reported as total oil production in the media.

After finding that I would trust that explanation more than what I wrote above. It's funny. I analyzed these distinctions 3-4 years ago and now see them as relatively unimportant. Far more urgent is figuring out how to align our wants and needs with our budget in time. And some of us have gargantuan perceived needs...