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Guest Post: A Long Way From Reaching Our Peak

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From Sean Corrigan

A Long Way from Reaching Our Peak

Inspired, among others, by the typically apocalyptic, ecological maunderings of Jeremy Grantham (the renowned investor here providing us with classic evidence of the general non-transferability of specific expertise from one metier to another), the recent overwrought oil market has brought the Exhaustionists out in full force, each plaintively wailing of the dangers of Peak Oil (as well as Peak Copper, Peak Corn, etc.—though never, thankfully, Peek Freans).

As is always the case at such times, the name of M. King Hubbert has been given a great deal of air, as if the old rhetorical trick of argumentum ad verecundiam should be decisive in this matter.

Yes, to give this particular devil his due, he did accurately predict that US onshore oil production would top out in the late 60s/early70s, so assuring his prophethood for ever, especially since the validity of the estimate became recognised amid the traumas caused by the first Oil Shock.

His other glances in the crystal ball have, alas, not borne out quite so well, however. 

World oil production was to reach its apex in 1995, he foretold in 1974: so far he is 16 years and 30% out. Nuclear energy would provide most of America’s need by around the turn of the new century, he assured us: as of 2009 the proportion was under 9%. Solar power was next seen to be the answer: 1970s technology was already deemed to be good enough to serve the entire world’s industrial needs within ‘a couple of decades’ - Oops! US production of natgas would also peak in 1970 at 14 Tcf a year: four decades on and we are rising through almost double that and with no apparent end in sight. 

Even more startling, this worthy was indeed a leading light of the crank-ridden Technocratic School which, with an almost Marxian degree of stubborn denial, has been predicting the demise of the Price System—i.e., the repudiation of the process of market exchange—since the mid-1930s and pushing for an unit of energy effort expended to replace money in our reckoning, plainly not realizing that this breakthrough concept is not much more than the long-discredited labour theory of value, albeit at one remove.

At the height of their brief sway, the grey-and-scarlet clad acolytes of this Utopian movement were heard clamouring that they would sweep away ‘production for profit’ in favour of ‘production for use’ (a slogan that also has a certain familiar ring to it) and to cast out the moneylenders and politicians in favour of a rational government conducted by a Platonic elite of scientists and technicians, naturally trusting that one of these latter could ever turn out to be either Pol-Pots or peculators and confident that the world and all its people’s needs and aspirations are no more than a big, juicy simultaneous equation just begging to be solved by an inner sanctum of assiduous eggheads.

No wonder that other twisted genius, H.G. Wells took to Hubbert so avidly.

By now you may be thinking that the US Peak  thing was a stopped-clock-right-twice-a-day fluke committed by a man who seems to have personified what Hayek called the ‘Fatal Conceit’ of the planners, namely that they—and they alone—can truly know how best to order production and distribution, replacing grubby commercialism with an exact calculus of abstract mass utility as carried out by a hushed order of white-coated Olympians in complete defiance of the individual subjective ordering of wants which each iota of a teeming humanity uniquely seeks to express.

But Hubbert was not the only public figure to try to apply a false, pseudo-scientific rigour to the issue of human fulfilment, nor the only one to declare that ’soon all the oil is going to be burned and all the metals mined and scattered’ or to insist that the only way out of an putative exponential growth trap of our own making is to stop people (in the impersonal abstract, of course) from having too many babies.

But, surely, your author has been recently asked, you can’t see Peak Oil theory as contentious? Is it not a mathematical inevitability, for goodness’ sake? How can you find it within yourself to demur at such trendy millennialism?

Because - oh, let me see - the planet has not yet been fully explored, much less exploited—only those bits of it which have showed the most promise given the prospect of profit (that dirty word!) and the constraints of existing technology? Because reported ‘reserves’ are, in any case, largely an accounting identity, not a hard, geological limit?

Because there is increasing evidence that abiotic, deep oil generation may be a thermodynamic reality, implying, if so, that at least some hydrocarbons would not be just a ‘fossil’ fuel, but an ongoing planetary process, i.e., ‘renewable’ in the real sense of the word?

Because it is not physical oil we want, in any case, but the energy services it provides and the state of the art today—much less that which we can realistically expected to hold good in the future—is such that, where it becomes cost-effective to do so, oil use can be cut dramatically in providing those very same services (think what the widespread US adoption of diesel cars would achieve, or the greater application of light plastics, advanced ceramics, and special alloys in their fabrication)? Indeed, we have already proved this in living memory for the West and Japan did exactly this for nigh on two decades after the second oil shock, all without the need for Green Soviet directives on what sort of light bulb we are permitted to use.

Because, that art will itself advance, the moreso that we allow market incentives to direct resources towards doing just that, meaning we might expect similarly exciting developments to continue in the fields of exploration, production and refining, not to mention in combustion, transmissions, aerodynamics, and tyre hysteresis, etc.?

Because of the phenomenon of shale gas with its enormous potential to confine oil to a narrow, mobile fuel role and even to substitute for it there, given sufficient means and motivation? (Which of the wild-eyed Doomsayers predicted its advent, by the way?)

Because, ditto—and I know no-one will want to hear this after Fukushima (despite the as-yet unquantified nature of the damage wrought there, which may even – so it please the Gods! - turn out to be as limited as it ultimately was at Chernobyl)—we can readily build a great number of new generation, uranium-cycle nukes and, better yet, fail-safe, non-pressurised, smaller-scale, non weapons-producing, thorium ones instead?

Because (admittedly in extremis, given today’s matrix of possibilities), there exist unimaginably vast, ocean-floor deposits of bacterially-generated methane clathrates all over our continental shelves (by one guess, equivalent to twice the known conventional hydrocarbon resource): when needs must, does anyone want to bet on our not being able to find a way to use them?

But, even having made all these objections – none of them exactly exercises in hare-brained futurology – there comes next the stock response: aaah, so you may deny Peak Oil, per se, but what you are admitting at least is the end of cheap oil?

Well, only to a certain point, for the laws of economics surely do apply to oil as they do to everything else to which we attach a value.

But I have yet to have someone tell me that, because an unforeseen burst of demand may require previously unprofitable, less cost-effective productive means to be temporarily applied to satisfy it, we have reached the end of ‘cheap beer’, or ‘cheap socks’, or ’cheap toilet rolls’ and that civilisation is therefore in imminent danger of collapse!

Even were we to close our eyes and allow for a moment that this most improbable of ‘certainties’ does indeed eventuate, we must beware of carrying an engineering argument over to the realm of economics where it is of no actual relevance. The putative end of ‘cheap oil’ does not mean we will henceforth have to live for ever using ‘dear oil’, just that a new dynamic will take over which will rapidly begin to compensate for the change.

After all, we don’t still fill our cars at a mark-up to the price of whale oil, or dispel the darkness from our homes on a beeswax-linked electricity tariff, now do we?

Nor does this possibility of having to find either a complete or partial substitute for oil at some indeterminate future date imply that it is at all sensible to prepare for it by squandering our scarce, present resources on such pitiable, non-sustainable, non-renewable, sub-optimal boondoggles as wind and solar.

Contrary to the Ecostormtrooper hype, we categorise them as such because - apart from the societal blight inherent in the flagrant rent-seeking and fledgling dictatorship which their forcible imposition entails - does anyone really believe that the equipment for collection, distribution, and storage of what piffling and unreliable amounts of energy are captured from such diffuse sources does not need manufacture, maintenance, repair, and replacement, in addition to the provision of a necessarily under-utilised, conventionally-powered back-up capacity and an intrusive infrastructure of access? Are we to ignore the fact that these infernal engines come complete with a huge, environmentally-significant ‘footprint’ themselves – whether it be in the concrete foundations, the rare earth magnet components, the polysilicon, or the composite materials of which each is built?

Nor should it go unrecognised that the subsidy glut in which they wallow actually prevents genuine progress being made, rather than advancing it, by making it highly lucrative for companies to swill deep and long from the public trough in return for churning out these economically sub-marginal and energetically dubious contraptions in vast profusion here, today, instead of them spending time and money seeking ways to make these systems - or any other alternatives which human genius can meanwhile discover – truly competitive and therefore unequivocally beneficial.

If, seized by a sudden fear that the world will one day lack for sufficient bicycles, our rulers summarily decide to tax both their existing makers and their heretofore satisfied users and to funnel the resulting booty to some favoured corporate giant which promises to equip us with a modestly-rejigged shopping trolley and a bargepole to propel it, we have hardly made progress, now have we?

Nor if we cut off every man’s right leg and then set up shop to sell him a prosthetic replacement can the resulting ‘Green jobs’ be said to have advanced the common weal. No. actually, we do not want another bloody Manhattan Project or any Apollo mission phallicism: we want a few more Rockefellers, Fords, and Teslas, left alone to work out how to enrich themselves by serving us instead!

To return to our original theme, the happenstance of a higher price for some good (and actually only a higher relative price, at that) should—if the market is being allowed to work properly—set in train the iterative search for a new balance which we have previously characterised as I²E²S² - that is to say, Innovation, Economisation, and Substitution, followed by Investment guided by Entrepreneurship, funded by Savings.

In this way, if left to their own devices, those despicably venal profit grubbers whom our lofty Philosopher Kings so despise will soon be busily arbitraging away their fleeting excess returns, reducing costs and increasing satisfactions for us, their customers, as they do.

Why do we think that oil—or, more broadly, energy—should prove an exception to this rule? Only, in truth, because the market is NOT being allowed to work.

Because, rather than being a true indicator of genuinely, increased scarcity or a mark of dwindling physical reservoirs, expensive oil may be nothing other than an artefact of the policies of the many governments who routinely suppress, penalize, or clumsily monopolize its production; who simultaneously subsidize its consumption—whether directly, or through general, Provider State, soft-budget outlays, or via the over stimulus of what passes for economic ‘growth’; and who—above all—routinely debase the numeraire in which the price of the stuff is reckoned.

All of these latter are, indeed, compelling reasons to invest in oil (and in any other raw materials where similar arguments apply), but they are in no way a vindication of Hubbert or Grantham or any other latter-day Malthus, crying that poor old Mother Gaia is being despoiled in the pursuit of filthy lucre!

It is much better to forget all that Sierra Club/WWF elitist, anti-mankind, horse manure about ‘the call on the planet’ exerted by us members of the ‘plague species’ and to take a little Bjorn Lomberg, a smattering of Julian Simon, and a riffle-through of Matt Ridley, regarding the minuscule size of the impact which our tiny little ilk – unimaginably outweighed by living forms we cannot even see - can really expect to exert on the vast, negatively-feedbacked rock which we inhabit—and to glory in the sustained quality of our response to the challenges which confront us, even under the far-from-ideal conditions under which we are usually asked to make it.

For example, just as an exercise in contextualisation, consider the following:-

The population of Hong Kong: 7 million. Its surface area: 1,100 km2
The population of the World: nigh on 7 billion, i.e., HK x 1000
1000 x area of HK = 110,000 km2 = the area of Cuba or Iceland

Approximate area of the Earth’s landmass = 150 million km2
Approximate total surface area = 520 million km2

So, were we to build one, vast city of the same population density as Hong Kong to cover the entirety of Fidel’s little fiefdom (not necessarily a Blade Runner vision of hell), this would accommodate all of humanity, and take up just 0.07% of the planet’s land area and 0.02% of the Earth’s surface.

Add in another patch or two for energy generation and maybe another few for growing food – perhaps by building super-efficient, CO?-enriched, drip-irrigated, skyscraper hydroponics factories, by exploiting the potential of the surrounding oceans more fully, or by bioengineering photosynthetic bugs to grow us pure nutrients –  and this would partition dear old Spaceship Earth thus: six or seven bits for us weakling, co-operative mutualists and 4,720 bits for all the unimaginable cornucopia of other species to wax and wane at each other’s red-in-tooth-and-claw expense, undisturbed by human hand.

Not such a bad ratio, you might think, even if you are a Marquis de Sade, equal-rights-for-plants-and-animals (plague bacilli and malarial parasites?), super-egalitarian nutcase.

So, rather than pestering the shoppers outside Oxford Street tube as you pace up and down with your ‘End is Nigh’, FSC-approved, sandwich board about your neck, you should ponder the innate ability of an unhampered, entrepreneurially-biased humanity to discover solutions to its problems.

Nor is this to indulge in some unswerving, fingers-crossed optimism: it is a realistic philosophy based on sound (Austrian) economics and one endowed with a pretty good empirical/historical track record, into the bargain    

Yes, if our political institutions were better and ideally much, much less intrusive in their scope –and, yes – if the intellectual gurus who help shape them were not so (a) conceited; (b) statist; (c) given to quack economics; (d) devoted to fashionable, Bloomsbury pessimism; and (e) prone to practice Munchausen-by-proxy denialism on the masses to whom they condescend, we would be much further along this track than we are now.

Indeed, this is the crux of the matter for if there is even a scintilla of truth to the scare stories with which the sinister SPECTRE of today’s Bio-Blofelds bombard us, what we lack is not space or resources but capital, time, property rights, and the free market exchange networks within which to exercise them.

The most pressing of our problems are not climatological or ecological, certainly not geological, but political and we will find no answers to these by dreaming wet dreams of a multi-billion genocide so the blessed residuum can potter about building composting toilets, permanently at danger of seasonal starvation, death by tooth decay, and high childbirth mortality in a cod Iron Age village (as half the Greens do), or of instituting a globally-monitored, strictly-rationed, top-down, totalitarian tyranny (what the other half get off on).

By way of contrast, consider instead that every member of that seven billion strong ‘drain on the planet’ is hard-wired with the best computer in the known Universe, one which its individual possessor is both incentivised and enabled to link up in a massively parallel, distributed process of discovery and improvement as long as he or she has even the smallest vestiges of a market structure to guide them and a certain minimum of property rights to protect them.

Consider, too, that if the proportion to the whole of Mozarts, Michelangelos, and Maxwells is even roughly constant, their likely incidence is greater now than ever it was.

That means that we might even look forward to being liberated from a tedious diet of hip-hop, installation art, and string theory, as well as to paying less to travel more miles at a faster pace in the fabulously-equipped and remarkably inexpensive, new set of wheels, sold to us by the recently–empowered entrepreneurial gentleman to our right.

And some people think we Austrians can never look on the bright side of anything!

 

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Thu, 05/19/2011 - 08:58 | 1290881 HamyWanger
HamyWanger's picture

Must agree with Corrigan on this one. 

Peak oil is a fantasy. Good when you are a doomer who wants to experience wet dreams, but it stops there. 

Our reserves of oil are good up to 2050. 

Thu, 05/19/2011 - 09:10 | 1290902 equity_momo
equity_momo's picture

Cool , so we are good for 38 years and change and then we just start walking everywhere?  Awesome.

Please dont talk to me about alternative energy.

 

Who is Sean Corrigan?

 

edit : i googled him and i see this blowhard on cnbc FAR too much.   he's another pro establishment , pro system , pro fiat , pro status quo moron.  he doesnt possess an ounce of critical thinking ability , he is a slave to his PAYE pay packet.

Thu, 05/19/2011 - 09:22 | 1290961 HamyWanger
HamyWanger's picture

Horse shit can be transformed into oil with a species of bacteries. In fact, nearly every organic matter can be artificially processed into petroleum. It's costly for now, but it will become more affordable when natural reserves deplete themselves and scientists are forced to develop alternative ways. 

So we'll never run out of oil. 

Thu, 05/19/2011 - 09:22 | 1290986 Flakmeister
Flakmeister's picture

It is not about running out of oil, dip shit. It is about the maximum flow rate.

Thu, 05/19/2011 - 11:27 | 1291585 Imminent Crucible
Imminent Crucible's picture

What the Corrigans and Wankers don't get is this: It really doesn't matter whether Peak Oil is correct in absolute terms.

What matters is that the global demand curve is ramping up to meet the global supply line. Whether supply actually falls from here out or not, is immaterial. The moment that world demand rises above sustainable supply, someone doesn't get their oil.

Price will necessarily explode because price is the rationing mechanism. War is the alternative mechanism, and that also guarantees exploding prices and unstable supplies.

Thu, 05/19/2011 - 15:18 | 1292837 JeffB
JeffB's picture

Exactly right.

Steven R. Kopits does a good job of discussing why it was "peak oil" that caused our problems in 2007 - 2008 rather than those dirty "speculators":

Whether Hubert &/or his followers were wrong on one or another or even virtually all of his/their predictions, and whether or not one believes in abiotic oil or scientific breakthroughs that will come to our rescue in the nick of time, there's really no denying that we ran into a brick wall in 2008 when the world could not supply enough oil on a daily basis to meet the burgeoning demand. Mr. Koppits:

http://www.aspousa.org/index.php/2009/05/peak-oil-not-speculation/

"...After many years of solid growth, oil production plateaued in October 2004. Regardless of the price level, the oil supply simply stopped responding, and from then on, the world had to make do with broadly flat supplies. Ordinarily, the expansion of the world’s economy would be accompanied by increased energy consumption and an inelastic oil supply might have been expected to hinder economic development.  It didn’t. In the four years to mid-2008, the world economy expanded by 18%. The global economy boomed, even without new oil.

However, this came at a price. In the absence of oil supply growth, demand accommodation was required. This was achieved by secular prices rises averaging 25% per annum from 2003 to the end of 2007. In other words, the price of oil went up, and this constrained consumption by causing the marginal consumer to drop out of the market. This proved a workable solution for a time, but the global economy could not sustain 25% annual price increases indefinitely, and by second half 2007, the situation was becoming critical. Consumption was being maintained by continuing draws on inventories averaging 1.4 million b/d, and virtually every producer, with the possible exception of the Saudis, was running flat out. By early 2008, even the Saudis were throwing the kitchen sink at the market - all to no avail. On paper, it looked like a peak oil nightmare.

Of course, consumers were responding. From 2005, the EU and Japan began to shed consumption and, from late 2007, US consumption also began to decline as the US consumer sought to escape high oil prices. Notwithstanding, developed economy consumers were not abandoning the market as fast as Chinese consumers were entering it, and prices continued to rise. In early 2008, prices took off and some argue that speculation took over. Still, as inventories continued to fall until May 2008 and all the oil producers were running at full output, the case for market manipulation at that time is hard to make. Indeed, the market was in backwardation most of this time. In backwardation, futures prices are lower than spot prices, the equivalent of the market saying, “Well, prices are high now, but they’ll be lower later.” The market - those very speculators - believed that oil was over-priced but was continually surprised as demand kept pushing up prices.

Prices did ultimately fall, but not because the supply situation eased, nor because speculators fled the market, and not because inventories were released. Prices fell because the global economy collapsed.

This period then shows us two of the possible adjustment mechanisms in the era of peak oil: oil-less growth characterized by increasing prices and continuous, incremental adjustment; and recession accompanied by a dramatic steep drop in consumption and a collapse of oil prices. The lesson to be drawn is that conservation can work within limits, but at some point, there is a straw that breaks the camel’s back and the whole system collapses. ..."

 

 

Thu, 05/19/2011 - 16:02 | 1292942 Joe Sixpack
Joe Sixpack's picture

JeffB:

 

What you describe does not prove peak oil. What you are describing could be a temporary capacity issue (perhaps driven by unrealistic demand caused by an exponentially increasing derivatives bubble, and a false wealth effect). You could have a proven 10,000 years supply of oil, but if you cannot pump it fast enough this will occur. In industry, when a company runs into this issue, they create a new production line. As the prices go higher, the economic justification for the new capital is justified. The problem is it takes time. I agree the consequences of what you are describing could be as bad as peak oil, but it is not peak oil.

Thu, 05/19/2011 - 16:18 | 1293089 Flakmeister
Flakmeister's picture

Correct, the 2008 collapse does not "prove" Peak Oil occurred There is no ultimate proof except by looking in the rear view mirror.

What we do have is clear evidence that Net Exports have peaked (2005), a clear plateauing of the net liquid Energy produced (starting 2005). We also know that since 2005 the number of wells has increased by 20% while the flow per well has commensurately decreased. We know that the North Sea has peaked (2000), Alaska (1990s) the GOM (1990s) have also peaked. The US peaked in 1970 and is down ~30% since then. We also know that decline of existing fields requires us to find the equivalent of a new Saudi Arabia every 4 years... 

BTW, the rear view mirror tells us that we drilling like crazy to stay in the same supply regime.

It is very clear that growth in supply of liquid fuels is not matching growth in demand.

Thu, 05/19/2011 - 16:21 | 1293101 blunderdog
blunderdog's picture

"Peak oil" means "peak production rate" of oil.  If the production rate is falling, it doesn't matter if there's an unlimited supply.  All that matters is production rate is falling. 

If you're saying that this isn't peak oil because the production rate is going to resume climbing soon, fine, but that does not refute the "peak oil" claim.  It's just speculation. 

Production has started declining.  Until it starts climbing, that WAS "peak oil."

Thu, 05/19/2011 - 23:02 | 1294390 JeffB
JeffB's picture

Exactly. If production peaked in 2004 despite year over year price increases of 25% until 2008 when prices exploded, then I would not consider that "a temporary capacity issue". Saying that it was "perhaps driven by unrealistic demand" makes no sense in the context of trying to say that we weren't experiencing a peak oil issue. The fact of the matter is that the producers could produce no more oil on a daily basis OVER A FOUR YEAR PERIOD despite ongoing major price increases. The *cause* of the demand is irrelevant. The problem is that they could produce no more regardless of the price.

Saying you have a lot of reserves (but you just can't get to them) reminds me of the Moron's Lottery. You could win $5 million paid out at $1 per year for 5 million years. Unfortunately, even if you won it probably wouldn't be prudent to think about retiring any time soon. Having $5 million in reserves probably wouldn't pay your monthly bills, much less your kid's tuition, and I doubt the cruise director would give you boarding passes based on those reserves. Similarly, having a bunch of oil in the ground doesn't do you much good if you can't get millions of barrels to market on a daily basis.

 

Thu, 05/19/2011 - 09:30 | 1291014 Quintus
Quintus's picture

"Horse shit can be transformed into oil with a species of bacteries"

Well then Hamy, you should prepare yourself for your new role as the Saudi Arabia of the 21st Century supplying the worlds energy needs in the form of Horse Shit.

Thu, 05/19/2011 - 09:33 | 1291030 KlausK
KlausK's picture

+ 254

Thu, 05/19/2011 - 13:00 | 1292117 Milestones
Milestones's picture

How many acres will we need to set aside to feed and care for the  vast number of horses required? Certainly much, much bigger than Hong Kong Hamy.? And water and lawn care for food?Hell, go for the gusto!!     Milestones

Thu, 05/19/2011 - 09:36 | 1291052 Guarded Pessimist
Guarded Pessimist's picture

"It's costly for now, but it will become more affordable when natural reserves deplete themselves and scientists are forced to develop alternative ways."

That's about the most idiotic statement I've ever read. Just because a problem is presented does not guarantee an easy cheap (like oil is easy and cheap, or was cheap) solution will be found. This is simply wishful (or hopeful) thinking. Get real.

Thu, 05/19/2011 - 09:43 | 1291071 BigJim
BigJim's picture

You've been HaMy'd.

Thu, 05/19/2011 - 15:12 | 1292811 asdasmos
asdasmos's picture

Nice Pic

Thu, 05/19/2011 - 09:36 | 1291056 LawsofPhysics
LawsofPhysics's picture

Yes it can, of course it requires ENERGY to do so and it can not be done at the SCALE required to meet demand.  I see we are trolling again today hamy.

Fri, 05/20/2011 - 04:22 | 1294818 Peter_Griffin
Peter_Griffin's picture

Farm water run-off and other debris in the Mississippi create algae which can be turned into crude oil.  I haven't figured out a way to harvest algae from the river without creating a diversion and holding area of some sort.  It would be nice to figure out a way to actually filter the Mississippi to reduce the dead zone in the gulf...

 

But I wonder if a swimming pool would be a big enough area to harvest a sufficient amount of algae to produce oil at home?  Brewery fermenters, from what I understand, can be used to speed up and increase the harvest of algae.  I would imagine prices on fermenters will fall with the economy at first.  BTFD?!?!

 

Anyone made any attempts at DIY oil and fuel production they would like to share?

Thu, 05/19/2011 - 15:09 | 1292780 VyseLegendaire
VyseLegendaire's picture

I'm not sure where we're gonna get hundreds of millions of barrels a day of fresh, ready-to-eat horse shit. 

 

Oh wait, we have your posts. 

Thu, 05/19/2011 - 09:07 | 1290903 Herne the Hunter
Herne the Hunter's picture

We'll never run out of oil because at some point it will become too expensive to pump. See 2008 where $150/bbl caused demand to implode. Now if we can increase efficiency as fast as oil production declines, it's going to be a different story. But as long as we cling to our F-150s to drive 10 miles to Wal-Mart for a 40oz bottle of Mountain Dew, we at least SHOULD be doomed.

Thu, 05/19/2011 - 09:22 | 1290990 Blindweb
Blindweb's picture

I'd argue that the only technology and systems that have a chance of being that efficient are organic in nature.  It aint easy to beat the efficiency of billions of years of evolution with bits of metal and silicone.

Thu, 05/19/2011 - 10:50 | 1291422 LowProfile
LowProfile's picture

I'd argue thorium reactors powering the grid and synfuel plants (coal to liquid fuel) would provide enough electricity and fuel for a millenium, and it would be orders of magnitude safer & many orders cleaner.

Actually, far longer than that, but I don't want to be seen as unreasonable.

Thu, 05/19/2011 - 09:04 | 1290904 samsara
samsara's picture

And You were a geology/physics major?

Ah,  didn't think so.  Earth Science wasn't good to you was it hamy.

Thu, 05/19/2011 - 11:35 | 1291615 Drag Racer
Drag Racer's picture

here is something from the geologists.

Yesterday I was listening to an MIT lecture and the 'insider' giving the lecture stated that BPs estimates are we have used 0.16 of known reserves.

Thu, 05/19/2011 - 11:39 | 1291654 Flakmeister
Flakmeister's picture

Wow, we must be all saved now. Can you quantify what consitutes these reserves?

Thu, 05/19/2011 - 09:05 | 1290911 Herne the Hunter
Herne the Hunter's picture

Also, reserves are a useless metric. It's about flow rates.

Thu, 05/19/2011 - 09:41 | 1291043 xPat
xPat's picture

Quite right. More specifically, it's about the flow rate that can be sustained at an economically viable cost. There's plenty more oil under the deep oceans, but it would cost $200+/bbl to extract it, and the economy can't afford that kind of energy price without serious risk of economic collapse and recession or depression.This author completely misses the point, and seems to be on an adolescent mission to deliver ad-hominem assaults on M. King Hubbert. The guy just doesn't get it.

 

Here's a video for investors about peak oil: http://www.eriktownsend.com/video-1-peak-oil-explained-for-investors.html

 

The video gets it right. The author of this article has a very creative and persuasive writing style, but the evidence simply doesn't support his perception of the world around him.

 

xPat

Thu, 05/19/2011 - 11:18 | 1291552 Urban Redneck
Urban Redneck's picture

Your argument assumes that the OWNER of the oil is willing accept less than 200 pieces of Bernanke fiat per barrel to have his wealth extracted from his land and made available on the open market.  Maximum Flow Rate Reductions can occur much faster as a result of economic or political decisions than as a result of geology and physics.

Fri, 05/20/2011 - 00:05 | 1294571 JeffB
JeffB's picture

Thanks, xPat. I really appreciated the video. He does a very good job in putting it all together in a very straightforward and easy to understand manner.

 

Fri, 05/20/2011 - 05:12 | 1294841 xPat
xPat's picture

Glad you enjoyed it. Check out Chris Martenson too, also excellent. www.ChrisMartenson.com. Watch chapters 17a/b/c from his free video crash course for a broader primer on energy economics.

 

xPat

Fri, 05/20/2011 - 10:26 | 1295294 JeffB
JeffB's picture

I will check it out. I'm a big fan of Chris Martenson and of his "Crash Course", but haven't watched his videos on "Peak Oil". I was already a believer and skipped over those videos. I guess I was a little glassy eyed by the time I got to the #17 videos in the series. ;)

 

Thu, 05/19/2011 - 09:17 | 1290948 legal eagle
legal eagle's picture

Certainly, the now Ex IMF chief has seen his peak, unless CNN decides to intervene and give him a talk show like Spitzer. I am calling peak IMF!

Thu, 05/19/2011 - 09:20 | 1290978 Inspector Bird
Inspector Bird's picture

The issue isn't whether we'll run out of oil or not.  In fact, that's the least of our worries.  We'll, in fact, probably have enough oil to supply whatever needs we have for as long as we need it.

 

The "question" in the discussion of peak oil isn't oil.  It's pricing of energy as a whole.  We have options, lots of them.  All are viable at a certain price.  For some of those options, the price is falling while for others it is rising. 

 

The likelihood of "peak oil" being true or real is slim - because it all depends on how you define what you need and how you choose to get it.  If your assumptions are based on needing the amount of oil we used today simply because that's what today is guding you on, then let's review history:

 

If this was 1000 extended out many years, then "peak wood" would be the point of discussion. 

If this was 1800 extended out many years, then "peak whale oil" would be an imminent problem

If this was 1860 extended out, then "peak coal" would have been a discussion (sure, there's loads of coal, but assuming something else hadn't come along....which is my point)

 

Fact is, we're going to have options, we always do.  We can't sit here and declare that "peak oil" is a problem simply because that's what we believe - we have to have situations which warrant that discussion (so many dry wells and delays in delivery and exorbitant prices ramping up faster than we can imagine).  We have none of this.  Even the price ramp ups are primarily driven by the magnification process of speculative fever driven by excessive monetary stimulus.

So sorting through the wreckage, let's be happy that prices for oil are rising, because THAT is what drives the shift to other technologies.  Were it not for the expense of coal, and the relatively sudden creation of easy oil collection and refining and it's relatively low cost versus energy released, it's likely our cars would be coal driven Stanley Steamers of some sort, our skies would be permanently black, and people would be concerned about "peak coal".

 

 

 

Thu, 05/19/2011 - 09:27 | 1291016 Flakmeister
Flakmeister's picture

If you notice, each transistion that you described was a migration to higher energy density substance. So, oh sage guru, what is next? Let me guess, if we would just let the "Free Market" work, we would all have Mr. Fusions...

Thu, 05/19/2011 - 10:08 | 1291177 Quintus
Quintus's picture

He's just recycling the same tired old 'Free Market will solve everything regardless of the surrounding world' claptrap that would have us believe that if you locked a dozen economists in a room, over time their collective demand for food would give rise to the spontaneous creation ex-nihilo of a tray of sandwiches to meet that demand, because demand for things always results in more supply right?

Thu, 05/19/2011 - 16:53 | 1293270 malek
malek's picture

Now imagine yourself inthe year 1000, 1800, or 1860 as mentioned above.
And then you'd also ask "So, oh sage guru, what is next?"

Something dawns on you?

 

Thu, 05/19/2011 - 17:01 | 1293331 Flakmeister
Flakmeister's picture

As to what is next, well... you can simply look at energy density. The logical progression was nuclear, we managed to fuck that up. The other way is to look at it to concentrate the flow from low flux sources, that is called solar, and it is not quite ready for primetime...

Your cute riposte missed something rather obvious about coal and oil, the world economy and population was in relative equilibrium at the onset of the hydrocarbon age, ~1800 It is through those hydrocarbons that we have increased the population 7-fold.... If the population was 1 billion and everybody consumed oil at current US rate, this pesky problem of peak oil would years away... 

Fri, 05/20/2011 - 12:42 | 1295860 malek
malek's picture

Well it clearly didn't dawn on you: Such questions are useless.
Note that energy density is only important in some applications, most obvious example are planes.

And who declares it impossible the population is not approaching a new relative equilibrium at 9 billion?

Fri, 05/20/2011 - 12:58 | 1295941 Flakmeister
Flakmeister's picture

Energy density is extremely important.... try powering a semi or a street car on coal...

Those 9 billion require will require ~20 mmbbd of oil for agriculture... Not saying its impossible, just highly unlikely... 

Thu, 05/19/2011 - 09:45 | 1291094 Flakmeister
Flakmeister's picture

You also might want to chew on this for a while.... this is what a real article looks like

http://xa.yimg.com/kq/groups/20593576/885722944/name/Patzek+and+Croft+2010+-+Peak+Coal+2011.pdf

Thu, 05/19/2011 - 09:56 | 1291142 Navigator
Navigator's picture

<<<The likelihood of "peak oil" being true or real is slim - because it all depends on how you define what you need...>>>

The term "Peak Oil" is a contraction for "Peak Oil Production".  It has absolutely nothing to do with "need"...in fact...if the world's "need" for oil decreased because aliens brought us unlimited free portable energy, oil production would plummet and we would (still) be past the point of world peak oil production.

You may want to study a little before you write in public Mr. Bird...it's less embarrassing that way.

Thu, 05/19/2011 - 11:03 | 1291465 dttmei
dttmei's picture

Who is Sean Corrigan?

Not a very convincing argument.  It fails to take into account the politics of transitioning to new energy fuels.  Of course civilization will survive, it is the transition that will be dislocating for all.  And, the negotiation over the rise of winners and losers will determine whether there can be a rational and acceptable agreement over these issues.

Thu, 05/19/2011 - 15:48 | 1292967 RafterManFMJ
RafterManFMJ's picture

I agree. Hydrocarbons are found on other planets and moons. Since we can safely assume they had a low population of ferns and dinosaurs, where did such oil come from?

Oil is continuously generated. See Deep Hot Biosphere by Gold

Thu, 05/19/2011 - 09:00 | 1290885 Herne the Hunter
Herne the Hunter's picture

What is the point of this article?

Thu, 05/19/2011 - 09:06 | 1290901 snowball777
snowball777's picture

We now know Sean had a hard time with PDE in school and carries a grudge over it?

Thu, 05/19/2011 - 10:11 | 1291198 Flakmeister
Flakmeister's picture

Hell, he had a hard time with ODEs

Thu, 05/19/2011 - 09:00 | 1290887 Navigator
Navigator's picture

 

 

This article is junk...but at least it'll be good for a giggle at the comments of the inevitable science deniers who will be duped into thinking it's genius.

Thu, 05/19/2011 - 09:09 | 1290925 kinetik
kinetik's picture

+1

Thu, 05/19/2011 - 09:20 | 1290964 Chris Jusset
Chris Jusset's picture

+1

Absolute junk.

Thu, 05/19/2011 - 09:09 | 1290928 Sofa King
Sofa King's picture

Science deniers, is that like a holocost denier...are we now going to make it a crime to dispell a hypothesis.  Dude, statistical speculation is not science, it's a social engineering tool...much like hope and fear.   Peak oil hasn't been proven and can't be proven which is why it will always remain a theory.  Me, I just trade the trends and make some extra bank so I can drive my gas guzzler around town just for the hell of it.

Thu, 05/19/2011 - 09:14 | 1290945 writingsonthewall
writingsonthewall's picture

So are you 'scientifically proving' that the supply of oil on a finite planet is endless?

I'd like to see that science.

Thu, 05/19/2011 - 09:42 | 1291065 Sofa King
Sofa King's picture

Didn't say I was proving anything, Fozzie. But I do think scale is a big factor in your finite planet non-sense.  Big planet and a whole bunch of small minds.

Thu, 05/19/2011 - 12:01 | 1291796 kinetik
kinetik's picture

Answer the question Mr Strawman.

Thu, 05/19/2011 - 14:10 | 1292504 SelfGov
SelfGov's picture

Peak oil is proving itself.

Thu, 05/19/2011 - 09:21 | 1290980 cowdiddly
cowdiddly's picture

+1 You can always tell when someone is trying to sell you something vs teach. Used car salesmen approach, windy bastard that won't shut up.

Thu, 05/19/2011 - 09:05 | 1290888 snowball777
snowball777's picture

World oil production was to reach its apex in 1995, he foretold in 1974

You ever have to pay to fill up the monstrous piles of shit produced in the 70s, Sean? Extrapolating that gas-guzzling designs would top out in '95 wasn't even 30% far-fetched; fuel efficiency has come a long way, in no small part because of the ranting of people like MKH.

And some people think we Austrians can never look on the bright side of anything!

Indeed. You've liberally sprinkled an entire Mormon CostCo Family box of fairy dust about.

Thu, 05/19/2011 - 09:03 | 1290895 samsara
samsara's picture

ha ha ha ha ha ha ha ha

 

THANK YOU TYLER for the welcome comic relief.

 

Thu, 05/19/2011 - 09:06 | 1290897 treasurefish
treasurefish's picture

Too long, and not very interesting. Can someone just summarize it?

Thu, 05/19/2011 - 09:12 | 1290927 Quintus
Quintus's picture

Sure:

Infinite growth IS possible within the confines of a finite planet.  You just have to close your eyes and wish really, really hard and then all the inconvenient obstacles to this utopia will vanish.

Thu, 05/19/2011 - 10:18 | 1291243 Oh regional Indian
Oh regional Indian's picture

Nice Quintus!
ORi

Thu, 05/19/2011 - 09:05 | 1290907 Coast Watcher
Coast Watcher's picture

Well, we're sure not at Peak Verbiage. It has been interesting to see how the abiotic oil scam has suddenly acquired a new cachet among those who least understand where oil comes from but who most desire that it last forever.

Thu, 05/19/2011 - 09:17 | 1290962 TomJoad
TomJoad's picture

And BINGO was his name-O.

 

Jump! You Fuckers!

Thu, 05/19/2011 - 09:46 | 1291084 mess nonster
mess nonster's picture

Peak verbiage indeed! Even if abiotic oil is real (who knows?) its reality won't make any difference. We've peaked- tipping pont, Fukushima. Every nuke plant has a decomission plan, but what happens when decomission happens sooner? Debt must be unwound. Peak oil is a distraction- what happens when we reach Peak Debt Saturation? Well, some servo manufacturer that makes valve opening servos for nuclear power plants goes out of business, and the consequenses of 400+ nuke plants suffering a lack of spare parts unnerves me more than Peak Oil. Distractions, distractions!

Thu, 05/19/2011 - 09:08 | 1290909 luciusfargo
luciusfargo's picture

Win.

Thu, 05/19/2011 - 09:09 | 1290915 Truffle_Shuffle
Truffle_Shuffle's picture

Sweet utopian dreams.

"The most pressing of our problems are not climatological or ecological, certainly not geological, but political and we will find no answers to these..."

Problems have solutions.  I tend to feel we are in more of a predicament in which we can only attempt to manage the outcome. 

Thu, 05/19/2011 - 09:12 | 1290936 writingsonthewall
writingsonthewall's picture

By definition - every problem must have a solution (otherwise it's a fact of life)

Thu, 05/19/2011 - 09:32 | 1291025 Dr. No
Thu, 05/19/2011 - 09:59 | 1291151 tmosley
tmosley's picture

Those problems have a solution. It just hasn't been found yet.

Sort of like our energy "problem".

Thu, 05/19/2011 - 10:09 | 1291185 Dr. No
Dr. No's picture

It may come as a shock to some, but are we humans capable of finding these solutions?  If we are not capable, then are there truely solutions?  Philosophers, please provide an answer to this problem!

Thu, 05/19/2011 - 12:08 | 1291827 downrodeo
downrodeo's picture

Evolution is telescopic. It doesn't end with walking upright. We may not be equipped to solve the problems in our present state, but give it a few generations and we'll have solved the problems that will arise from the solutions to the questions we're currently asking.  

Thu, 05/19/2011 - 14:16 | 1292518 Citxmech
Citxmech's picture

Evolution is also not "directional," i.e., it doesn't have "aims," or follow a "upward" trajectory.  All evolution is, is the progression of adaptations to changing circumstances - in other words, we are not progressing toward some "higher" or better purpose.

Put another way, in a lower-engergy future, multi-cellular life might be at a disadvantage. . .

Thu, 05/19/2011 - 10:12 | 1291209 Flakmeister
Flakmeister's picture

Not necessarily, consider the Axiom of Choice and Godel's Theorem..

Thu, 05/19/2011 - 12:15 | 1291871 Rhodin
Rhodin's picture

Politicians are a problem.  They must have a solution.  HCl perhaps?

Thu, 05/19/2011 - 09:12 | 1290929 Smokey1
Smokey1's picture

Unauthenticated specious garbage.

Unadulterated (as opposed to adulterated) bullshit.

Ignorant conjecture. Unsubstantiated speculation.

Peak oil is a fact. Make peace with that shit.

Thu, 05/19/2011 - 09:14 | 1290944 luciusfargo
luciusfargo's picture

Were the first three lines an introduction to the last?

Thu, 05/19/2011 - 09:14 | 1290933 writingsonthewall
writingsonthewall's picture

" Solar power was next seen to be the answer: 1970s technology was already deemed to be good enough to serve the entire world’s industrial needs within ‘a couple of decades’ - Oops! US production of natgas would also peak in 1970 at 14 Tcf a year: four decades on and we are rising through almost double that and with no apparent end in sight.  "

 

Well maybe he didn't count on the energy companies suppressing the technological advances in Solar power as they make no money from it.

 

I mean this is Economics 101 - it doesn't work without scarcity - so what would a free, renewable energy source do to all those CEO wages?

Come on Alice - drag yourself through the looking glass here.

"Because there is increasing evidence that abiotic, deep oil generation may be a thermodynamic reality, implying, if so, that at least some hydrocarbons would not be just a ‘fossil’ fuel, but an ongoing planetary process, i.e., ‘renewable’ in the real sense of the word?"

 

Isn't oil produced from the decay of nature over thousands of years? - of course it's renewable - but not as quickly as we're using it fella!

"you should ponder the innate ability of an unhampered, entrepreneurially-biased humanity to discover solutions to its problems."

 

Is this a joke? - you mean like the entrepreneurial Henry Ford who invented the Motor car (or at least made it mass produced) - which was the source of our later problems with climate and resources.

 

You see this is the problem with society being developed along the lines of 'what makes a profit' - it can never, and will never take into account the social costs of such enterprise. So private profit today is tomorrows social cost.

 

...oh and your land to population ratio calculations are misleading - Hong Kong doesn't grow all it's own food, it doesn't provide it's own water, it doesn't generate it's own electricity as you point out. A convenient place to choose as Hong Kong isn't much more than a glorified residential and business 'estate' with all it's needs provided from OUTSIDE of hong Kong and they take up a much greater area than your 'pie in the sky' estimate.

If you take into account all this - then you'll find the land mass a very different calculation. I mean do you really believe that the world could manage with a density of Hong Kong?

This is a bit poor - not up to ZH's usual standard. It's just another Austrian confusing 'human progress and innovation' (which happens anyway) with market activity. The two are not correlated - as every economist should know, the FIAT currency is what supports the fiction that it's Economics which is growing us - and not our own ability to innovate.

 

Like I always say - man invented the single most important invention in history - the wheel - and he did this long before he was motivated by profit.

The internet is demonstrating how powerful non-profit innovation can be - who runs the world wide web? - the paid corporations, or the unpaid hackers.

Sony can fill you in on that.

Thu, 05/19/2011 - 09:12 | 1290941 Dragline
Dragline's picture

Talk about a crack-pot cut and paste job.  Not an original thought to be found here.  Classic setting up of straw men and railing against them.

Looks like he just finished his "Internet Rants 101" class and this was his term paper.

Thu, 05/19/2011 - 14:26 | 1292567 akak
akak's picture

This tossed salad of strawman arguments, specious red herrings, and ad hominem attacks, all liberally doused with an equal mixture of hopium and denial of reality, is one of the most intellectually shameful pieces that I have ever seen headlined here on ZeroHedge (next to leo's contributions, of course).

Tyler, what were you thinking?

Thu, 05/19/2011 - 09:17 | 1290946 Prof. Auguste Balls
Prof. Auguste Balls's picture

Grantham's primary point is that compound growth is not sustainable in a finite world - he is right.  Its just math and apparently Corrigan is verbally inclined.

 

Balls

Thu, 05/19/2011 - 09:15 | 1290952 DougM
DougM's picture

Global oil production has been stuck between 83~86MPD for the last 7 years.  The world has peaked until that range is broken.

Thu, 05/19/2011 - 09:21 | 1290967 Cassandra Syndrome
Cassandra Syndrome's picture

Peak oil happened over 20 years ago when the quantity of oil produced surpassed the quantity of oil discovered. The divergance is massive now, this can only perpetually push up prices, especially that the chickens have come home to roost on the price repressive excessive quanitites of paper and electronic trades.

Thu, 05/19/2011 - 09:18 | 1290970 Blindweb
Blindweb's picture

This guy is the epitomy of a complex system moron

Just because something is theoretically possible doesn't mean it can be implemented.  How do you get a global consensus on what the best course of action is?  How do you educate the masses?  All that takes more energy and resources.  If peak oil has been reached, all available energy is now being used to support the current system.    

"by exploiting the potential of the surrounding oceans more fully, or by bioengineering photosynthetic bugs to grow us pure nutrient" 
So you think you can just grow a bug that is more efficient than a bug grown through billions of years of evolution?  You run into the same problem as with slavery, eventually you spend more resources trying to control the slaves than the slave produces. 

Hong Kong????? What are you talking about?  Hong Kong is the epitomy of nonsustainable?  Do you have any clue how much energy and land mass it takes to support Hong Kong?

Cuba is one of the closest places on the planet to being sustainable.  They are ranked 105th in population density.  They also happen to be in the tropics and to be ruled by a dictator. 

We will reach a better place.  But billions will die in the process.  This is 100% certain.  If you divert mass resources to education and research, people die.  If you don't, people die. 

It's too late bitches

Thu, 05/19/2011 - 09:20 | 1290975 simon says
simon says's picture

There's only one thing I want to know about Sean ... who is his supplier?

Thu, 05/19/2011 - 09:23 | 1290977 Flakmeister
Flakmeister's picture

Wow, I don't even know where to begin with warm fuzzy pile of dreck... No numbers except for some whacked out extrapolation of the HK population density...

Yeah, onshore peaked when Hubbert said it would, even adding offshore and Alaska we never came close to the that peak... For the deniers out there, it is all about flow rates not reserves.

 

Thu, 05/19/2011 - 09:31 | 1291017 anvILL
anvILL's picture

+1 Great point.It's all about the flow rate.
Especially oil(energy), silver and cash.

Afterall, we had plenty of cash when Lehman went bust.
It's just that Lehman didn't have that cash.

Thu, 05/19/2011 - 09:21 | 1290984 King Dong
King Dong's picture

This article is a lame attempt at sophistry

Thu, 05/19/2011 - 09:22 | 1290985 buzzsaw99
buzzsaw99's picture

Hard sledding. That guy can fill up a page with blather like unto no other.

Thu, 05/19/2011 - 09:27 | 1290998 Lucius_Junius_Brutus
Lucius_Junius_Brutus's picture

Have you ever anything of actual worth to say or do you just flap your mouth for the pleasing sound it makes?

Thu, 05/19/2011 - 09:22 | 1290987 Weimar-eddie
Weimar-eddie's picture

Sorry, this is a completely lame-ass non-analysis. It flies in the face of worldwide industry knowledge, the actions of that industry, and even now the begrudging admissions of the IEA. Every oil field, every region, every country, every continent, and by extension (as Hubbard reasoned) every planet (except perhaps the one the author is from) follows a bell curve of increased production followed by decline. If you want to give us pie in the sky about hydrogen or some other energy saviour, fine. But don't waste our time with straw man arguments, laughable assertions that the planet has not been fully mapped and explored, and a lame-ass plea to reject Hubbard and his mathematical logic because he called peak 10 years before it happened, or didn't foresee that Three Mile Island and Chernobyl would happen and put a dent in the dreams of the nuclear energy complex. Stick to something more convincing, like, the fact that he asserted that blue was the best color when we all know that it is in fact green. Even those remotely aware of the actual situation can understand this to be a pure, unadulterated piece of propaganda fantasy.

Thu, 05/19/2011 - 13:05 | 1292152 Rhodin
Rhodin's picture

I agree he is lame.  And peak oil will arrive at some point, even if its because we have less use for oil. 

Currently, the main use of peak oil theory is to dampen resistance to high oil prices in the face of decreasing demand.  It is not a coincidence that both Hubbert and Simmons were creatures of oil corporations and (in Simmons case) banksters.  Notice the demise (accidental, of course) of Simmons when he strayed from the script. 

When considering data on oil production, supply and reserves, the sources of the data should be considered.  In most cases the root sources are governments and oil companies with a vested interest. 

Banksters are managing the oil price on the exchanges, and managing supply through control of governments (war;  exploration and drilling controls) and oil companies (refinery capacity).

Thu, 05/19/2011 - 09:27 | 1290999 goldenrod
goldenrod's picture

Completely useless article. The peak in discoveries was in 1964. The peak is production was in 2005. Here is a table that shows the average annual production of crude oil+condensate and the corresponding average annual price. Note that the production did not increase after 2005 although the price did. EIA crude + condensate, rounded off to nearest one mbpd & Annual US spot crude oil prices (source http://www.theoildrum.com, http://www.theoildrum.com/node/7909#comments_top): 2002: 67 mbpd & $26??? 2003: 69 mbpd & $31 ?2004: 72 mbpd & $42? 2005: 74 mbpd & $57??? 2006: 73 mbpd & $66??? 2007: 73 mbpd & $72 ?2008: 74 mbpd & $100??? 2009: 72 mbpd & $62??? 2010: 74 mbpd & $79?? What is more ominous is that the net crude exports peaked in 2005 and are now in decline. This is because many oil exporters are consuming more of their own product and therefore have less to export.

Thu, 05/19/2011 - 09:31 | 1291033 goldenrod
goldenrod's picture

Here is the net oil export data by top 5 oil exporters (Saudi Arabia, Russia, Iran, Norway, UAE): First column is year and second column is average annual net exports in million barrels per day (source: http://www.theoildrum.com/node/7909#comments_top).

2005: 23.8 mbpd
2006: 23.6
2007: 22.9
2008: 22.8
2009: 19.3
2010: 21.8 (estimated)

Notice a pattern? The next exports are in decline in the face of rising demand and rising price. The exporters have every incentive to maximize exports but they are not able to.

Thu, 05/19/2011 - 11:42 | 1291652 Urban Redneck
Urban Redneck's picture

This data set and the one below do not prove anything other than oil exports are lower now than in 2005 and production is the same. 

Oil price is a function of demand (ceteris paribus + a global credit crisis and recovery in certain countries +/- consumer's currency to $ cross)

Oil production is a function of price and available storage and consumption capacity (assuming a producer is willing to allow extraction at a given price). 

"exporters have every incentive to maximize exports but they are not able to" Once a producer nation's budget is balanced and current expenses paid, what is the incentive to pump excess oil, other than to prevent a global slowdown?  THERE IS NONE, AND BERNANKE IS DESTROYING THE EXISTING BUSINESS CASH FLOW MODEL OF OIL EXPORTING NATIONS. 

Thu, 05/19/2011 - 12:08 | 1291739 goldenrod
goldenrod's picture

Once a producer nation's budget is balanced and current expenses paid, what is the incentive to pump excess oil, other than to prevent a global slowdown?  THERE IS NONE,

 

Essentially what you are saying is that exporters are voluntarily curtailing exports even when the price is sky high.  All the evidence suggests otherwise.  Saudi Arabia and other oil producers are spending a lot of money on exploration and drilling, often in difficult and inhospitable areas.  Why would they do that if they have significant spare capacity that they could bring online anytime?

 

Also, remember that prior to 2005 oil exporters always (barring political events like oil embargo) increased production and exports when the price increased.  That is how they kept price in a preferred price band.  OPEC's preferred price band was $22-$28 in 2004.

 

Oil production is a function of price and available storage and consumption capacity (assuming a producer is willing to allow extraction at a given price).

I consider it shocking that you don't consider geology as a factor in oil production.  The following countries/regions have demonstrably peaked: Continental USA in 1970, Texas in 1972, North Sea in 1999.  Indonesia, which was a member of OPEC not so long ago, is now an oil importer.  UK, which was exporting a lot of oil in 1999, had no more oil to export by 2005.  China, which was an oil exporter until 1992 is now the second largest importer.  Why don't these countries simply increase production to meet domestic demand?  Because they can't.

 

If you agree that individual countries and regions peak and decline, then the global oil production (which is just the sum of oil production of individual countries and regions) must peak and decline.  All the evidence suggests that the global oil production has peaked.

 

 

 

 

 

Thu, 05/19/2011 - 14:16 | 1292527 Urban Redneck
Urban Redneck's picture

...

China, which was an oil exporter until 1992 is now the second largest importer ...

All the evidence suggests that the global oil production has peaked.

 

That utterly errant thought process isn't worth dignifying with a response, but I will anyway.

Thu, 05/19/2011 - 14:54 | 1292729 goldenrod
goldenrod's picture

What errant thought process?  My point is that the upper limit on oil production is based on geology and not price or demand as you stated.  In every oil producing region, production eventually peaks and then goes into decline.

If you agree that individual regions eventually peak and decline then it follows that global production which is just the sum of the production of the individual regions must eventually peak and decline.

 

The evidence for a peak now lies in the fact exporters have not been able to increase their exports since 2005 inspite of the fact that the price has doubled.  Since most of the oil producers are spending a lot of money on exploration and drilling the decline in exports is probably not voluntary.

 

May be you are the one with the muddled thinking?

 

 

Fri, 05/20/2011 - 07:17 | 1294908 Urban Redneck
Urban Redneck's picture

No – you and your intellectual silo of “geology” are the muddled thought process. "Must eventually" and "peak in production was in 2005” are two completely different arguments.

 

I am not sure what happened to the response I wrote yesterday, but here is a rough recreation.

 

As near as I can tell you are presenting a small set of discrete data points (annual production totals from 2005 on) and trying to argue that because of the scientific constraints of GEOLOGY that world oil production has peaked.  This is nonsense.  World oil production may or may not have peaked in 2005, only time will tell.  However, it most certainly did not peak because of a scientifically demonstrable geological constraint that exists in the current world.

 

Misc

 

China – To argue that China’s move from net exporter prior to 1992 to net importer today is evidence of “Peak Oil” is nothing more than “Sheer Stupidity.”  There is a direct correlation between energy consumption and GDP output.  Since 1992, China’s GDP has grown at an average annualized rate of 9.66%, and has increased by 1200%.  If China’s domestic production had increased by 1200%, this would utterly sink the theory of Peak Oil.  However, Chinese domestic production not keeping pace with GDP growth is not actually evidence of a peak in global production, it merely demonstrates that Peal Oil is even a possibility.

 

Indonesia– Pertamina can barely find its own ass with both hands, much less oil, and rarely does so without substantial fiat lubrication.  Suharto’s nationalization and mismanagement of the industry killed its efficiency.  Exploration in progress at the point of the nationalization coincided with peak production five years later.  Indonesia can no longer even attract foreign investment to meet domestic refining needs.  If Indonesia can resolve maritime boundary disputes with Malaysia and Australia, reduce corruption and attract investment and expertise then it should be able to increase domestic oil production.  

 

 

Economic

Global Macro

The US is currently the worlds largest oil consumer.  2005 was the height of the credit bubble that allowed Americans to spend beyond their means.  Unless you accept that Joe Biden’s Recovery Summer tour was a raging success, and the broad segment of the US economy has recovered to pre-crunch growth, there is no reason that US oil demand should meet, much less exceed, demand in 2005. 

 

2005 was also the year that the US SPR was filled to the brim.  Filling the SPR conveniently bypasses the refinery bottleneck in oil production and distribution.

 

If MENA unrest and uncertainty continues, but does not explode into cross-Gulf warfare, then completion of Phases 2 & 3 of the Chinese SPR should provide an interesting insight into the maximum daily production capacity of Saudi Arabia.

 

OPEC Specific

I have written on this elsewhere, but in short- the cash flow model for maximum Production is slowly breaking down (which is completely distinct from Exploration even though E&P tend be grouped under a single chief executive within the NOCs).  The arguments within OPEC used to be about the morals and ethics of leaving oil in the ground for the next generation.  The cash flow model under the original Aramco concession (when it was US owned) was oil-for-gold.  Since then, the "gold standard" has migrated to US Treasuries.  US Treasuries became an ugly investment with the commencement of Greenspan’s ZIRP and negative real returns.  The SWF’s coincidentally exploded as an alternative vehicle to domestic investment and US Treasuries. 

 

Since Bernanke took over US Treasuries have become a downright FUGLY TWO BAGGER BITCH of an investment choice for excess oil production revenues.  SWF’s present other issues since they primarily invest paper and Bernanke is determined to break every significant paper market outside of US Treasuries & Equities.  The rise of protectionism complicates the SWF vehicle further, examples including Dubai Ports P&O acquisition and the blocked CNOOC-Unocal deal, among others.  Domestic investment and diversification away from the petroleum sector is also problematic in a number of OPEC states.  The credit and real estate collapse in the UAE creates bubble re-inflation problems, neighboring States that did not suffer the implosion are taking a more cautious and measured approach to domestic investments.  The MENA uprisings also call into question the wisdom of significantly increasing domestic exposure for certain OPEC members.    

 

 

Mechanical

Oil production and distribution is the most sophisticated distributed just-in-time delivery model in the world.

There tends to be negligible above ground storage capacity in producing States, therefore a ship must be anchored to receive production or a pipeline built to the nearest refinery.  Otherwise a wrench is thrown in the otherwise well-oiled machine, like the PR debacle with the Saudi blend to replace Libyan production taken offline after the invasion.  Simply pumping oil and “hoping” for a pickup/buyer at current prices is not the way the industry works.  High prices may incent OPEC members to exceed production quotas, but they have to secure buyers who take physical delivery before the oil is pumped.   

 

Political

Vast areas of probable and potential oil reserves are excluded from current production for purely political reasons.

 

Between the shipping lanes and the boundary disputes in the Persian Gulf alone there is a zig-zagging no-go line that extends from the Straight of Hormuz through the South Pars-North Pars Sunni-Shia divide.

 

Moving out from the Gulf- current maritime boundary disputes that prevent geologists from conduction exploration, studies, and test wells include: China-Vietnam, China-Japan, Vietnam-Cambodia, Bangladesh-Myanmar, Myanmar-Thailand, Thailand, Cambodia, Brunei-Malaysia, Indonesia, East Timor-Australia, Peru-Chile, Venezuela-Columbia, Guyana-Suriname, Nicaragua-Costa Rica, Cuba-Bahamas, Libya-Tunisia, Nigeria-Equatorial Guinea, Nigeria-Cameroon, Gabon-Equatorial Guinea, Ghana-Côte d'Ivoire,  US-Canada, US-Denmark-Russia (the whole North Pole tbd).

 

There is also the prohibition on coastal and continental shelf exploration in the US.

 

By your own statistics oil production today roughly matches oil production in 2005.  Oil production capacity today is certainly capable of increasing beyond 2005 levels.  The world economy has not significantly recovered in aggregate beyond pre-credit crisis levels.  The primary constraint is not geology it is economics and politics. 

 

 

 

Thu, 05/19/2011 - 09:39 | 1291055 goldenrod
goldenrod's picture

Sorry, table got messed up above. Here is the oil production data in millions of barrels per day and the average annual price in a tabular format:

2002: 67 mbpd & $26
2003: 69 mbpd & $31
2004: 72 mbpd & $42
2005: 74 mbpd & $57
2006: 73 mbpd & $66
2007: 73 mbpd & $72
2008: 74 mbpd & $100
2009: 72 mbpd & $62
2010: 74 mbpd & $79

Thu, 05/19/2011 - 10:02 | 1291167 Partisan
Partisan's picture

Your second table seems to be a complete contradiction of your first, rendering your entire point invalid.  Also, the reason why those countries are supposedly exporting less of their oil is to keep it for themselves -- they have drivers, too.  The state oil companies subsidize the domestic price by decreasing exports.

 

http://www.businessinsider.com/saudi-arabia-oil-exports-to-decrease-due-to-increased-domastic-demand-2011-4

 

* BTW, had bust out the calculator for these complex captcha equations.  :P

Thu, 05/19/2011 - 10:13 | 1291226 Flakmeister
Flakmeister's picture

 No, you have the comprehension problem, one is exports for the top 5, the other overall world production.

If SA chooses to sell its oil domestically at less than Market value, do you have beef with that? It is their oil....

Thu, 05/19/2011 - 12:26 | 1291932 Partisan
Partisan's picture

True, I do have a reading comprehension problem.

And no beef with countries selling their oil to their own folks.  It's just too bad we couldn't have done what the liberal media accused us of doing while we've been over there, and just stolen it.

Thu, 05/19/2011 - 12:31 | 1291957 Flakmeister
Flakmeister's picture

It's just too bad we couldn't have done what the liberal media accused us of doing while we've been over there, and just stolen it.

 

I have no idea what you are talking about. Something tells me that makes two of us....

Thu, 05/19/2011 - 14:41 | 1292648 Partisan
Partisan's picture

Hahaha.  What I meant was tongue in cheek - namely, that we should have taken the oil when we had a chance.

Thu, 05/19/2011 - 17:06 | 1293339 Flakmeister
Flakmeister's picture

Trust me... we tried. Ever wonder why the Iranians are so pissed at the West?

Thu, 05/19/2011 - 10:29 | 1291320 goldenrod
goldenrod's picture

One table is for total production; the other one is for net exports.

Also, the reason why those countries are supposedly exporting less of their oil is to keep it for themselves -- they have drivers, too.

I completely agree.  The point is that prior to 2005 they were able to increase their exports by utilizing their spare capacity.  After 2005 there was no spare capacity.

 

 

Thu, 05/19/2011 - 09:29 | 1291004 LawsofPhysics
LawsofPhysics's picture

Quite the lovely ramble.  It is great to ramble when one can ignore facts.  I have been in agriculture for 30+ years and my brother is in oil and gas (currently "fracking" in Texas and New Mexico).

There may in fact be considerably more energy in oil, natural gas, and coal, but it is getting more and more expensive to access and process, that is simply the way it is now.  Someone has got to pay for this, meaning either the companies doing it live with a smaller profit margin OR people pay more for it, period.

The vast majority of all our commodity chemicals (that allow such a high standard of living) come from cracking oil and natural gas - again this is simply a fact.  There has been some success (by my operation as well as the big boys - Monsanto, Dupont, Cargill) in engineering plants and microorganisms to produce the commodity chemicals that we need to produce the same commodity chemicals BUT the scale of these operations are not even close to what is required for 8 billion people AND these process compete directly with FOOD production.

All of this ignores important biological cycles (that also require energy) required to maintain the current life on this planet.  Some of the more important cycles are the sulfur cycle, the phosphorus cycle, and the nitrogen cycle (basically these cycles represent different oxidation states for these elements).  The latter cycle is the sticking point for humanity. Why is the nitrogen cycle so important?  Well, this is where reduced nitrogen (a.k.a. ammonia), otherwise known as fertilizer comes from.  Plants, that beef cows and humans need to eat, need fertilizer.  The reduction of gaseous nitrogen to ammonia takes a tremendous amount of energy (that is just basic thermodynamics - sorry).  Some bacteria catalyze this process on their own and some even live symbiotically with plants (like legumes).  Even in this case, it still takes a tremendous amount of energy.  Sorry folks, crop rotation and organic farming won't feed 8 billion people.  This was recognized long ago by very smart people, hence they came up with a solution and since the early 1900's Dupont has been doing something known as the Haber Bosch process.  This man-made process (which consumes a tremendous amount of energy) is now providing one third of all the ammonia used to create biomass (for food or fuel - don't forget the biomass to ethanol boondoggle).  With respect to agriculture, none of this considers the additional fuel requirements for moving the fertilizer and food around.  Here is the bottom line; in our current world economic system, even a small increase in energy cost now translates into big margin compression and costs throughout the "biomass" supply chain.

Ultimately we are left with the sun as the ONLY source of energy for the planet, period (and even that will burn out eventually), so we either agree to work together to advance our species OR we simply admit that (as this website proudly proclaims) we are all doomed and say fuck it, let the strong survive and let it be one big free-for-all.

Hey fucknuts, you ARE biomass!  As an example of why you should be concerned; if Dupont shuts down the Haber Bosch process, one third of the biomass on the planet disappears within weeks.  No reduced nitrogen, no biomass.  the "laws of economics" are a joke and we have allowed fraud and hypocrisy to rule for far too long.  Hedge accordingly.

Thu, 05/19/2011 - 09:34 | 1291041 Dr. No
Dr. No's picture

Ultimately we are left with the sun as the ONLY source of energy for the planet, period

Geothermal.  Hell aint freezing over anytime soon.

Thu, 05/19/2011 - 09:49 | 1291088 LawsofPhysics
LawsofPhysics's picture

Yeah, and what is the margin for cost on that?  What is the risk? Goddamn laws of physics are a bitch.  New Zealand has been tapping their geothermal energy for some time now, the recent earthquakes have fucked up some operations because of shifting magna flows.  BIG cost to fix.  You buying?

Now let's extend this out a bit.

Cool that planet's core, end the magnetic field, end life.  Great plan.  Hell may not freeze over anytime soon, but why accelerate it? Seems kind of selfish, but if that is your thing, so be it.

Read my post, I am always looking for solutions but this continues to get more and more challenging as the financial fucknuts continue to base their economic models on "mark to unicorn" bullshit and ignore REALITY.

I say crash the fucking system so compensation can return to those the bring real value to the economy, not simple push paper and spout bullshit (like the author of this article).

Thu, 05/19/2011 - 09:49 | 1291110 Dr. No
Dr. No's picture

I didnt say geothermal was viable.  You had posted the on a long enough time line the sun is the only source of energy "period".  I simply pointed out there are non-sun energy sources.  Now, if the earth core cools before the sun explodes, is a topic for a different post.

Thu, 05/19/2011 - 10:01 | 1291160 LawsofPhysics
LawsofPhysics's picture

Agreed.  So it really does look like we need to crash the system at this point.

Thu, 05/19/2011 - 10:27 | 1291302 False Capital
False Capital's picture

Nuclear power too. Convienently ignored in your LawsofPhysics.

Thu, 05/19/2011 - 10:30 | 1291323 Flakmeister
Flakmeister's picture

Nukes were the bridge before solar would be mature.... We had 50 years to to perfrom the transistion.... We fucked it up.... The classic example of the "Free Market" being incabable of discounting FV beyond the end of the CEO and shareholders noses.

Thu, 05/19/2011 - 10:56 | 1291423 LawsofPhysics
LawsofPhysics's picture

Still need a source of nuclear fuel and a mechanism for disposing of waste.  Not a viable solution in all locations either.  So you propose nuclear reactors to fix nitrogen to feed more people, requireing more nukes for more people and so on?

 

What I did not articulate is that you cannot convert all the biomass on earth to humans.  All that radiation being dumped in the Pacific is already affecting CO2 adsorption by marine organisms.  What will the effects be?  Who knows, but the facts remain.  Slow down, stop, in general fuck with these cycles and life (in its present form) ends.  Wouldn't be the first time, so I guess why not.  Wall to wall humans until there are none!

 

More to the point of this blog, who pays for the cost of building all these nukes?  Who pays to maintain them?  The financial fuckwads have been extracting real value from the system we all share for far too long without creating things of real value themselves.  Like all things, there is a balance that must be (and will be) maintained.  Take the fucking system down already so compensation will find its way back to those that are actually worth a shit.

Thu, 05/19/2011 - 09:35 | 1291050 LFMayor
LFMayor's picture

This is good news, now we've found a viable use for all those upper and lower society parasites.  Since they too are biomass, we'll use them to fix nitrogen into the soil. 

Vegetable Gardening:  you can do it above the surface, with a hoe.  Or you can do it below the surface, taking a dirt nap.

Thu, 05/19/2011 - 09:51 | 1291106 LawsofPhysics
LawsofPhysics's picture

Yep, we all get there eventually, now if we just had more "volunteers".

Thu, 05/19/2011 - 09:42 | 1291059 Quintus
Quintus's picture

Excellent post.  Too many people still think of Oil as just the thing that goes in the tank of their SUV, not realising how completely our standard of living, eating, and everything else relies on complex industrial systems that themselves ultimately depend on cheap, plentiful energy.

Having passed (In all probability) the point of peak flow the supply/demand ratio of fossil fuels will become increasingly one-sided, and prices will rise.  This does not just mean driving less, and driving smaller cars.  It means that starting at the bottom of the global population and working up over time, people will be priced out of food, clothing and anything else they cannot produce locally by their own manual labour.

Thu, 05/19/2011 - 10:03 | 1291157 mess nonster
mess nonster's picture

Yes...AND I still maintain that we will run out of money before we run out of oil. 1.(whatever) quadrillion in derivative debt/exposure alone. What is total global debt? Make up a number, the bigger the better- and you're in the ballpark.

Rising oil prices means rising food prices, transportation prices, etc, means less debt service, more defaults, money supply contraction, DESPITE all QE attempts, thus leading to innovative debt-relief measures, ie war, revolution, explosions, fires, and death.

C'mon, who wants to bet? I bet (but whatever shall we bet with???) we run out of money, and resort the above "alternative" but time-trusted debt-relief schemes WAY before we run out of oil. There will be gasoline to operate your Toyota truck full of AK-weilding fellow revolutionaries-cum-local-version-of-the-Taliban, but money? You'll be buying your hunk of charred mystery meat with 7.62 ammo, not folding money.

Thu, 05/19/2011 - 10:04 | 1291175 LawsofPhysics
LawsofPhysics's picture

"Yes...AND I still maintain that we will run out of money before we run out of oil. 1.(whatever) quadrillion in derivative debt/exposure alone. What is total global debt? Make up a number, the bigger the better- and you're in the ballpark"

 

Yep, you are right, that was part of my point.  We need an entirely new system of economics because, quite frankly, the financial fucknuts and their greed, corruption, and "mark to fantasy" accounting bullshit have stolen all the real wealth required to fund these endeavors.  Crash the fucking system already so compensation can return to those that can actually get something of REAL value accomplished.

Thu, 05/19/2011 - 10:06 | 1291179 Navigator
Navigator's picture

Excellent post LawsofPhysics.  You should write an article on this for Tyler...and all the science deniers.

Thu, 05/19/2011 - 09:30 | 1291011 Hulk
Hulk's picture

Math innumerate author...

Thu, 05/19/2011 - 09:30 | 1291029 viator
viator's picture

Good article, but it will fall on deaf ears. Peak whatever is one of the dogmas of the anti-capitalist religion and as such is not open to argument. It keeps a large group of losers occupied, however. Watch them drive their Keynesian, multicultural, green, statist, corporatist European project over the cliff much to the grief of the people of Europe. The world will drill for shale NG for the same reason people rob banks.

Thu, 05/19/2011 - 09:34 | 1291031 Stephen
Stephen's picture

Grantham's main point focused on what happens when compound growth meets finite resource.  The price signals we are seeing over the last few years should tell you the answer.

Thu, 05/19/2011 - 09:31 | 1291032 slewie the pi-rat
slewie the pi-rat's picture

reincarnation is the answer to peak oil?

Thu, 05/19/2011 - 09:36 | 1291040 viator
viator's picture

Good article, but it will fall on deaf ears. Peak whatever is one of the dogmas of the anti-capitalist religion and as such is not open to argument. It keeps a large group of losers occupied, however. Watch them drive their Keynesian, multicultural, green, statist, corporatist European project over the cliff much to the grief of the people of Europe. The world will drill for shale NG for the same reason people rob banks.

Thu, 05/19/2011 - 09:53 | 1291114 Flakmeister
Flakmeister's picture

Do you have a problem separating ideology and science? A lot of the problems the World faces is because there are too many idiots that are incapable of figuring out the difference....

Thu, 05/19/2011 - 09:36 | 1291042 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Peek Freans

Let them eat biscuits -- bitchez!

Thu, 05/19/2011 - 09:36 | 1291053 string
string's picture

ERoEI

Thu, 05/19/2011 - 09:36 | 1291054 jms2112
jms2112's picture

What a goddamn jackass.

Thu, 05/19/2011 - 09:42 | 1291080 Note to self
Note to self's picture

Well said.

Thu, 05/19/2011 - 09:38 | 1291064 uniman
uniman's picture

Peak? Off course.  When? Who knows? I sure don't.

I'm somewhat skeptical about _impending_ peak oil but think it would most likely be found in the case of very specialized definitions of "oil" such as real-cheap and easy to pump out of the ground.  However, if you generalize this to peak fossil fuels then I agree that in moving beyond Jed Clampitt's oil there's an abundance of natural gas, coal, oil shale, methane hydrates, geological quantities of early 21st century fiat money, etc. 

The problem then becomes how much of this do we dare burn before the climate is fubared?  Instead of throwing bananas at me for suggesting this possibility please provide some numbers and calculations.  Back of the envelop is fine.  I'm specificially interested in finding out what is the highest safe CO2 concentration that any climate-change naysayers suggest.  Measuring the rise this concentration over the last few centuries is easy, as is calculating ball park concentrations in the future, given some quantity of combustion. 

One element of the anti-peak argument that I agree with is that the "oil" doesn't ever just stop.  It just becomes more and more difficult to get.  So for example, by the time you are desperate enough for oil shale, then it's time to realize that energy density is about that of a potato.  So perhaps it would be better to grow potatoes and pocket ag subsidies instead of flattening a mountain range.

I also find it somewhat entertaining that the author would piss all over peak oil by promoting an even more extreme refutation via abiotic oil.

As far as windmills, solar, Bartertown Gas Co, etc., go, let's let the free market decide.  I'm talking about a _real_ free market minus any ez credit, tax gimmicks, mandates, prohibitions, anchovies, or other government provided market hallucinogens, but with the one caveat that the cost of disposing of waste CO2 should be fully captured by the market place and not subsidized by ma nature.

Thu, 05/19/2011 - 09:55 | 1291122 Flakmeister
Flakmeister's picture

The problem is that the Free Market is incapable of discounting over 5 years into the future....

We will burn coal, oil etc... until the inevitable stares us in the face...

Thu, 05/19/2011 - 09:44 | 1291075 American Sucker
American Sucker's picture

Sean Corrigan is still the worst writer I've ever had the misfortune to read.  It's doubly fun that he thinks we can have infinite growth with finite resources.  What a shithead.

Thu, 05/19/2011 - 09:55 | 1291136 Scoobywan
Scoobywan's picture

I must of missed that part in the article....

Thu, 05/19/2011 - 09:45 | 1291078 chistletoe
chistletoe's picture

Peak oil occured in 2006-2008.

As prophets go, Hubbert was reasonably close.

 

but please, don't confuse anybody with the facts!

Thu, 05/19/2011 - 09:45 | 1291079 Serfs Up
Serfs Up's picture

Great article!

... assuming the intent was the literary equivalent of quickly circling a grounded bat 10 times with forehead touching and then stumbling off hopelessly in the wrong direction.  Under these terms, it was brilliant.

What I read of it anyways...I didn't get very far having exceeded my stupid quotient for the day by the third paragraph.

Thu, 05/19/2011 - 09:45 | 1291097 Vergeltung
Vergeltung's picture

excellent article. I'm sure it won't set well with the usual suspects around here. I have to give ZH credit for posting contrary views (and what would/will be highly unpopular with the regulars here).

cheers!

 

Thu, 05/19/2011 - 09:47 | 1291101 LawsofPhysics
LawsofPhysics's picture

Don't kid yourself, most of what is being sold in a "mark to fantasy" world is bullshit.

Thu, 05/19/2011 - 09:52 | 1291121 Dreadker
Dreadker's picture

I like to read the other side of the argument once in a while... sit back... look at both sets of facts... then keep buying PM's and working on self sufficiency.... One scenario... I'm wrong and the wife gets a lot of custom jewellery and we eat healthy.... Other scenario... I'm laughing at writers of this and similar articles...

 

He lost me when he said "we can all live on cuba!"...  And build an energy patch... and a food patch... problem solved!

Thu, 05/19/2011 - 09:55 | 1291124 Scoobywan
Scoobywan's picture

I don't think very many of you read it, let alone understood it.

The article has very little to do with "peak oil" or alternative energy, it has to do with Humankind thinking that we should be or are in control of anything, and that our needs normally overpower any obstacles to fulfilling them, but instead our society has ruined this mechanic through government, regulation and ridiculous beliefs.

Reading is one thing comprehension is another.

Thu, 05/19/2011 - 10:03 | 1291156 Flakmeister
Flakmeister's picture

Yes, the riduculous belief that growth as it is currently defined is can continue indefinately.

Thu, 05/19/2011 - 10:07 | 1291194 LawsofPhysics
LawsofPhysics's picture

The piece clearly promotes infinite growth, which is impossible.  Not much to comprehend really.

Thu, 05/19/2011 - 12:46 | 1292033 Scoobywan
Scoobywan's picture

It promotes the insignificance of the human race.

Thu, 05/19/2011 - 09:54 | 1291129 speedy
speedy's picture

If I rate this article it seems that I have to give it at least one star and that is one more than it deserves.

Thu, 05/19/2011 - 09:54 | 1291131 Payable on Death
Payable on Death's picture

The best writer on this is Mark Hulbert, author of the Bottomless Well. The, er, bottom line is that every prediction of exhausted resources have been wrong.

The problem with all resource extraction is not technology, ecology, or economy--those can all be resolved. It's political. If we have a problem with oil scarcity, it's because so much is controlled (owned) by governments. Mexico is the nearest example of gross mismanagement. Their constitution prohibits foreign ownership, and the result is inefficient production (a great deal of the product is left in the ground) and environmental degradation.

It's amazing to me how a gallon of gas is so under-appreciated. It's incredibly cheap given the technology, capital, and human risk required to deliver it. Gas is also a uniquely compact bundle of easily convertible energy.

A wise and non-technological friend of mine once asked, "Why would we leave any of it in the ground?" Indeed.

Thu, 05/19/2011 - 09:57 | 1291144 LawsofPhysics
LawsofPhysics's picture

Yeah, go get it all, then what?  See my previous post regarding the use of oil and energy.  Biological cycles and the laws of thermodynamics are a bitch.

Thu, 05/19/2011 - 11:07 | 1291495 Payable on Death
Payable on Death's picture

It's not about a thermodynamic balance, its economics--price (see comments of John Watson below). Better yet, read Hulbert's book.

Thu, 05/19/2011 - 11:17 | 1291529 LawsofPhysics
LawsofPhysics's picture

Yes, price for things of value.  Modern economies depend on cheap energy to keep prices down.  I run a business, I know what my margins look like.  The financial fucknuts who believe in models detached from reality need to be shot promptly.  You underscore my point perfectly, economics remains detached from reality.  It will get corrected, one way or the other.

Thu, 05/19/2011 - 10:09 | 1291183 Flakmeister
Flakmeister's picture

Cantarell was perhaps the most sophisticated oil field ever, horizontal drilling, N2 injection (in fact the largest N2 plant on the planet) and it crashed.

So is the US the same as Mexico? Are you saying we are just too stupid and corrupt to increase our oil production?

Please provide evidence of "a great deal of product is left in the ground". I assume of course that you are conversant in recovery factors as to pertaining to the geology of oil fields and EOR techniques.

Thu, 05/19/2011 - 11:19 | 1291487 Payable on Death
Payable on Death's picture

From Wikipedia on Cantarell: "Analysts theorize that this rapid decline is a result of production enhancement techniques causing faster short-term oil extraction at the expense of field longevity." The internets are full of such discussion...

We are, indeed, too stupid to increase our oil production, and while I'm not an expert on EOR techniques (despite my B.S. ChE) John Watson is:

"In theory, he says, "we've been running out of oil and gas for a long time," yet technology creates new opportunities. Mr. Watson cites a Chevron field long in decline down the road in Bakersfield—to the point that for every 100 barrels of oil "in place," the company was extracting only 10 or 20. But thanks to a new technology called steam flooding, Chevron is now getting 70 to 80 barrels. "Price creates incentive, and energy will be developed if there's demand for it at the price you can develop it," Mr. Watson says. In that sense, "oil and gas are plentiful."

Don't believe it? Over the past 30 years, even as "peak oil" was a trendy theme, the world's proven reserves of oil and natural gas increased 130%, to 2.5 trillion barrels."

http://online.wsj.com/article/SB10001424052748704013604576248881417246502.html

My point is, if the US has a supply problem, its because the (irrational) politics constrain the technology and economics.

Thu, 05/19/2011 - 11:22 | 1291554 LawsofPhysics
LawsofPhysics's picture

The presence of more oil is not the the concern fucknut.  What is the flux of the energy dense material through the system and most importantly, can it be maintained? 

 

My brother works in fracking and steam flooding, both which require BIG energy costs up front, making the profit margin even less.  Hhmm, use more energy to get less return on the energy you will burn to extract more and so on.  Not sustainable.

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