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Guest Post: Oil Limits And The Economy - One Story; Not Two

Tyler Durden's picture




 

Submitted by Gail Tverberg of Our Finite World blog,

The two big stories of our day are:

(1) Our economic problems: The inability of economies to grow as rapidly as they would like, add as many jobs as they would like, and raise the standards of living of citizens as much as they would like. Associated with this slow economic growth is a continued need for ultra-low interest rates to keep economies of the developed world from slipping back into recession.

 

(2) Our oil related-problems: One part of the story relates to too little, so-called “peak oil,” and the need for substitutes for oil. Another part of the story relates to too much carbon released by burning fossil fuels, including oil, leading to climate change.

While the press treats these issues as separate stories, they are in fact very closely connected, related to the fact that we are reaching limits in many different directions simultaneously. The economy is the coordinating system that ties together all available resources, as well as the users of these resources. It does this almost magically, by figuring out what prices are needed to keep the system in balance—how much materials of which types are needed, given what consumers can afford to pay.

The catch is that the economic system is not infinitely flexible. It needs to grow, to have enough funds to (sort of) pay back debt with interest and to make good on all the promises that have been made, such as Social Security.

Energy use is very closely tied to economic growth. When energy consumption becomes slow-growing (or high-priced—which  is closely tied to slow-growing), it pulls back on economic growth. Job growth becomes more difficult, and governments find it difficult to get enough funding through tax revenue. This is the situation we have been experiencing for the last several years.

We might think that governments would be aware of these issues and would alert their populations to them.  But governments either don’t understand these issues, or only partially understand them and are frightened by the prospect of what is happening. The purpose of my writing is to try to explain what is happening in terms that people who are used to reading the Wall Street Journal or Financial Times can understand.

I am not an economist, so I can’t speak to the question of what economists are saying. I do know that what economists say tends to change from time to time and from researcher to researcher. For example, in 2004, the International Energy Agency prepared an analysis with the collaboration of the OECD Economics Department and with the assistance of the International Monetary Fund Research Department (Full Report, Summary only). That report said, “.  . . a sustained $10 per barrel increase in oil prices from $25 to $35 would result in the OECD as a whole losing 0.4% of GDP in the first and second year of higher prices. Inflation would rise by half a percentage point and unemployment would also increase.” This finding is consistent with the issues I am concerned about, but I expect that not all economists would agree with it. Oil prices are now around $100 per barrel, not $35 per barrel.

The Tie of Oil and Other Forms of Energy to the Economy

Oil and other forms of energy are used to power the economy. Historically, rises and falls in the use of oil and other types of energy have tended to parallel GDP growth (Figure 1).

Figure 1. Growth in world GDP, compared to growth in world of oil consumption and energy consumption, based on 3 year averages. Data from BP 2013 Statistical Review of World Energy and USDA compilation of World Real GDP.

Figure 1. Growth in world GDP, compared to growth in world of oil consumption and energy consumption, based on 3 year averages. Data from BP 2013 Statistical Review of World Energy and USDA compilation of World Real GDP.

There is disagreement as to which is cause and which is effect—does GDP growth lead to more oil and energy demand, or does the availability of cheap oil and other types of energy power the economy? In my view, the causality goes both ways. Oil and other types of energy are needed for economic growth. But if people cannot afford oil or other types of energy products, typically because they don’t have jobs, then energy use will drop. And if oil prices drop too low, we will be in real trouble because oil production will stop.

How Oil Limits Work

People tend to think of limits as working in the same manner as having a box with a dozen eggs. Once the last egg is gone, we are out of luck. Or a creek dries up from lack of rainfall. The water is no longer available, so we have lost our water source.

With the benefit of the economy, though, limits are more complicated than this. If we live in today’s economy, we can purchase another box of eggs if we run short of eggs, assuming markets provide eggs at a price we can afford. If the creek runs dry, we can figure out a different approach to getting water, such as buying bottled water or hiring a tanker to get water from a source at a distance and bringing it to where it is needed.

Oil limits are a kind of limit we often hear concerns about. Being able to drill oil wells at all and refine the oil into products of many kinds requires a complex economy, one that can educate engineers working in oil extraction and can build paved roads, pipelines, and refineries. The economy needs to be able to produce high tech equipment using raw materials from around the world. Thus, there must be an operating financial system that allows buyers at one end of the globe to purchase materials from the other end of the globe, and sellers to have the confidence that they will be paid for contracted products.

If a company wants to extract oil, it can almost always figure out places where this theoretically can be done. If a company can gather together all of the things it needs—trained workers; enough high tech extraction equipment of the right type; enough pollution-fighting equipment, to prevent oil spills and spills of radioactive water; and leases on land where drilling is to done, then, in theory, oil can be extracted.

In fact, the big issue is whether the extraction can be done in a sufficiently cost-effective manner that the whole economic system can be supported. Even if the cost of extraction “looks” fairly cheap, such as in Iraq, or in some of the older installations elsewhere in the Middle East, the vast majority of the revenue that is generated from oil extraction (often as much as 90%) goes to support the government of the country where the oil is extracted (Rogers, 2014). This revenue is needed for many purposes: desalination plants to provide water for the people; food subsidies, especially when oil prices are high because food prices will tend to be high as well; new ports and other infrastructure; and revenue to provide jobs and programs to pacify the people so that the government will not be overtaken by revolt.

A major issue at this point is the fact that most of the easy-to-extract oil is already under development, so companies that want to develop new projects need to move on to locations that are more difficult and expensive to extract (Bloomberg, 2007). According to oil industry consultant Steven Kopits, the cost of one major category of oil production expenses increased by an average of 10.9% per year between 1999 and 2013. In the period between 1985 and 1999, these same expenses increased by 0.9% per year (Kopits, 2014) (Tverberg, 2014).

When production costs are higher, someone loses out. It is as if the economy is becoming less and less efficient. It takes more people, more energy products, and more equipment to produce the same amount of oil. This leaves fewer people and less energy products to produce the goods and services that people really want, putting a squeeze on the economy. The economy tends to grow less quickly because part of the goods and services available are being channeled into less productive operations.

The situation of the economy becoming less and less efficient at producing oil is called diminishing returns. A similar problem exists with fresh water in many parts of the world. We can extract more fresh water, but it takes deeper wells. Or we have to ship in water from a distance, using a pipeline or trucks. Or we need to use desalination. Water is still available but at a higher per-gallon price.

Diminishing Returns is Like a Treadmill that Runs Faster and Faster

There are many ways we can reach diminishing returns. One easy-to-illustrate example relates to mining metals. We usually extract the cheapest-to-extract ores first. An important cost consideration is how much waste material is mixed in with the metal we really want–this determines the ore “grade.” As we are gradually forced to move from high-grade ores to lower-grade ores, the amount of waste material grows slowly at first, then dramatically increases (Figure 2).

Figure 2. Waste product to produce 100 units of metal

Figure 2. Waste product to produce 100 units of metal

We know that this kind of effect is happening right now. For example, the SRSrocco Report indicates that between 2005 and 2012, diesel consumption per ounce of refined gold has doubled from 12.7 gallons per ounce to 25.8 gallons per ounce, based on the indications of the top five companies. Such a pattern suggests that if we want to extract more gold, the price of gold will need to rise.

The economy is affected by all of the types of diminishing returns that are taking place (oil, fresh water, several kinds of metals, and others). Even attempting to substitute “renewables” for nuclear and fossil fuels electricity production acts as a type of diminishing returns, if such substitution raises the cost of electricity production, as it seems to in Germany and Spain.

If the total extent of diminishing returns is not very great, increased efficiency and substitution can act as workarounds. But if the combined effect becomes too great, diminishing returns acts as a drag on the economy.

Oil Increases are Already Higher than the Economy Can Comfortably Absorb

For oil, we can estimate the historical impact of increased efficiency and substitution by looking at the historical relationship between growth in GDP and growth in oil consumption. Based on the worldwide data underlying Figure 1, this has averaged 2.0% to 2.4% per year since 1970, depending on the period studied. Occasional years have exceeded 3%.

The problem in recent years is that increases in the cost of oil production have been much higher than 2% to 3%. As mentioned previously, a major portion of oil extraction costs seem to be increasing at 10.9% per year. To make this comparable to inflation adjusted GDP increases, the 10.9% increase needs to be adjusted (1) to take out the portion related to “overall inflation” and (2) to adjust for likely lower inflation on the portion of oil production costs not included in Kopits’ calculation. Even if this is done, total oil extraction costs are probably still increasing by about 5% or 6% per year—higher than we have historically been able to make up.

According to Kopits, we are already reaching a point where oil limits are constraining OECD GDP growth by 1% to 2% per year (Kopits, 2014) (Tverberg, 2014). Efficiency gains aren’t happening fast enough to allow GDP to grow at the desired rate.

A major concern is that the treadmill of rising costs will speed up further in the future. If it is hard to keep up now, it will be even harder in the future. Also, the economy “adds together” the adverse effects of diminishing returns from many different sources—-higher electricity cost of production, higher metal cost of production, and the higher cost of oil production. The economy has to increasingly struggle because wages don’t rise to handle all of these increased costs.

As one might guess, when economies hit diminishing returns on resources that are important to the economy, the results aren’t very good. According to Joseph Tainter (1990), many of these economies have collapsed.

Why Haven’t Governments Told Us About these Difficulties?

The story outlined above is not an easy story to understand. It is possible that governments don’t fully understand today’s problems. It is easy to focus on one part of the story such as, “Shale oil extraction is rising in response to higher oil prices,” and miss the important rest of the story—the economy cannot really withstand high oil (and water and electricity and metals) prices. The economy tends to contract in response to a need to use so many resources in increasingly unproductive ways. We associate this contraction with recession.

We have many researchers looking at these issues. Unfortunately, most of these researchers are focused on one small portion of the story. Without understanding the full picture, it is easy to draw invalid conclusions. For example, it is easy to get the idea that we have more time for substitution than we really have. Financial systems are fragile. The world financial system almost failed in 2008, after oil prices spiked. We are still in very worrisome territory, with many countries continuing a policy of Quantitative Easing and ultra low interest rates. We may have only a few months or a year or two left for substitution, not 40 or 50 years, as some seem to assume.

Of course, if governments do understand the worrisome nature of our current situation, they may not want to say anything. It could make the situation worse, if citizens start a “run on the banks.”

The other side of the issue is that if governments and citizens don’t understand the full story, they may inadvertently do things that will make the situation worse. They certainly won’t be looking long and hard at what collapse might look like in the current context and what can be done to mitigate its impacts.

 

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Sat, 03/22/2014 - 17:56 | 4580932 0b1knob
0b1knob's picture

Units of waste production per 100 units of metal.

Is that in femto metric tons per cubic furlong?   Metric or english system?

Sat, 03/22/2014 - 17:58 | 4580935 FieldingMellish
FieldingMellish's picture

Its a ratio so its unitless.

Sat, 03/22/2014 - 18:08 | 4580955 Flakmeister
Flakmeister's picture

Yes...

It is another way of expressing declining ore quality...

Sat, 03/22/2014 - 18:13 | 4580960 Skateboarder
Skateboarder's picture

Used to be shitloads of little fake marshmallows in the bowl of cereal. Mostly oats nowadays.

Sat, 03/22/2014 - 18:20 | 4580975 css1971
css1971's picture

Better for you.

Sat, 03/22/2014 - 18:31 | 4580997 kaiserhoff
kaiserhoff's picture

It is mindless Luddite propaganda to claim that all human progress is forever limited by cheap oil, the concentration of ore, or any other "SHORTAGE".  It demonstrates a lack of knowledge of history, economics, innovation, and a profound and pathetic laziness about real work and real problems.

ZH deserves better.

 

Sat, 03/22/2014 - 18:40 | 4581008 knukles
knukles's picture

Thank you.

BTW if that unit of waste per lump of you know what is rounded to the nearest whole number is it "pointless"?

Sat, 03/22/2014 - 18:51 | 4581031 kaiserhoff
kaiserhoff's picture

Rounding the toxic waste to zero?  Sounds like something we should do to Barry;)

A drinking Buddy got this right.  He said if Barry wants to 'punish" Putin, he should approve the pipeline, sanction off shore drilling and wait for Putin to poop his depends.

Sat, 03/22/2014 - 18:52 | 4581034 Mister Kitty
Mister Kitty's picture

No worries.  There's plenty of oil to go around.  Bitches.

Sat, 03/22/2014 - 19:36 | 4581113 CrashisOptimistic
CrashisOptimistic's picture

Gail and the peak oil folks spend a LOT of time trying to sound mild and reasonable because for some reason they care what other people get from their output.  Somewhat pointless perspective when faced with inevitability, unless they are fundraising.

There IS plenty of oil and there always will be plenty of oil.  It's underground and that's where it will stay.  It is in smaller and smaller bubbles of geologic porosity.  You can expend the effort (who cares about measuring it in dollars?) to get a coke can sized bubble of porosity, or you can just wisely decide the effort ratio is not favorable.  A coke can of oil doesn't go very far.  it doesn't even power the drill thru 100 feet of rock.

This is why the folks sneering at the concept are out to lunch.  They are RIGHT.  There IS and WILL BE plenty of oil.  They can't grasp that they are right and are going to die of scarcity anyway.

Sun, 03/23/2014 - 15:34 | 4583000 daveO
daveO's picture

Monopoly power helps drive prices. I remember back in the 70's when the Ad Council was running commercials about oil running out. This, while Carter(a Rockefeller stooge) was hog-tying the nuclear industry. Alternative energy was all the rage. I remember an office building being built with Solar Panels on the roof. 'Solar's gonna save us'. Then Volcker raised rates back above the market. A few years later the oil boom turned to bust. Solar panels and alternative energy went into hibernation. Alternatives are being hyped by the same monopolists who endeavor to keep oil off the market. Solyndra is a perfect example, funded with taxpayer money funnelled to the well connected. 

Sun, 03/23/2014 - 16:08 | 4583076 Flakmeister
Flakmeister's picture

I'll give you a F for the revisionist history lesson...

Sat, 03/22/2014 - 21:09 | 4581320 Rakshas
Rakshas's picture

Mister Kitty, 

unlike a good number of ZH members who don't appear to need the soothing support that your blog brings I, having recently suffered a personal loss, enjoy a return to the innocence of the internet of years past and find myself visiting your blog whenever it is proffered in kind I would like to share with you a Site dear to my heart in hopes you too can benefit as I have from your kindness.

 

 

Sun, 03/23/2014 - 15:22 | 4582979 daveO
daveO's picture

Well, we know that ain't gonna happen. Oil prices started going up after the majors all merged back in the late 90's. BHO's just another one of their puppets. Add in artficially low interest rates for most of these years and voila, $100+/barrel oil. Bring rates back to normal, and watch things normalize.  

Sun, 03/23/2014 - 16:09 | 4583080 Flakmeister
Flakmeister's picture

Zzzzzz.....

Sat, 03/22/2014 - 18:47 | 4581021 css1971
css1971's picture

Have you read my "delusions" post?

I happen to be somewhat sympathetic to your view, as opposed to CrashisOptimistic... Putting me on the optimistic side. However, even in the best case, the world is going to be very different, a large proportion of what you see around you is going to "go away" and be replaced by something else. It's possible a very large number of people are going to "go away" as well, "progress" may not be what you expect.

 

Sat, 03/22/2014 - 19:10 | 4581074 chemystical
chemystical's picture

"The world will end in this year" or "...on this day" for the truly bold predictors.

Said these notables:

Simon bar Giora 70 A.D.

Martin of Tours 400 A.D.

Hippolytus A.D.

Sextus Julius Africanus 500 A.D.

Gregory of Tours 806 A.D.

Pope Sylvester Jan 1, 1000 A.D.

Sandro Botticelli 1504 A.D.

Martin Luther 1600 A.D.

Sabbatai Zevi 1648 A.D.

Christopher Columbus 1656 A.D.

Cotton Mather 1697 A.D.

Jacob Bernoulli 1719 A.D.

John Wesley 1836 A.D.  ................ fast forward

Jean Dixon 1962 A.D, and 2020 A.D. (after the earlier prediction failed

Jim Jones 1967 A.D.

Charles Manson 1969 A.D.

Pat Robertson 1982 A.D.

Benjamin Creme 1982 A.D.

Edgar Whisenant 1988, 1988 (different day) and 1989 A.D.

Louis Farrakhan 1991 A.D.

Harold Camping 1994, 1994, 1994 A.D. (different days after the earlier prediction failed), 2011 and 2011 (different days after the earlier prediction failed).  Persistent little bugger.  A failure but a persistent failure.

Marshall Applewhite 1997 A.D.

Nostradamus 1999 A.D.

Charles Berlitz 1999 A.D.

Timothy Dwight IV 1999 A.D.

Isaac Newton 2000 A.D.

Edgar Cayce 2000 A.D.

Sun Myung Moon 2000 A.D.

Aum Shinrikyo 2003 A.D.

Pat Robertson 2007 A.D.

OOPS

 

 

Sat, 03/22/2014 - 19:28 | 4581107 css1971
css1971's picture

The risk is of a Dark Age, rather than the end of humanity.

HTH.

BTW, the European dark age is represented in your list, if you'd care to plot the frequencies. circa 500 -> 1600.

Sun, 03/23/2014 - 05:25 | 4581932 August
August's picture

Please, let's give the High Medieval, not to mention the Renaissance, a little R-E-S-P-E-C-T. 

I'd go with 500 - 800 for true Darkness, with every man his own sovereign, just like Simon Black, and those white dudes in Montana.

Sun, 03/23/2014 - 08:27 | 4582038 prains
prains's picture

....oh the good ol'days when the Llamas ran free and Simon was just a boy dreamin about how to catch them

Sun, 03/23/2014 - 13:16 | 4582633 chindit13
chindit13's picture

Don't turn the lights out on Charles Martel!  Dark Ages, indeed!

Little known fact:  In order to fund the full-time army he felt he needed to fight then-modern wars, Martel held a bake sale at the monastery of St. Martin of Tours, where a small creme-stuffed yellow cake sold rather well.  It has been said that the remaining Merovingians, then near terminal decline, were rather too fond of the pastry and overconsumption made them dissolute, hastening their fall.  So popular was the cake, in fact, that some historians claim the recipe was the real goal of the Umayyad invaders, not the spread of Islam into northern France.

Martel and his professional army went on to defeat the Umayyads, France and Europe remained Christian, and the cake became the Twinkie. 

Now you know.

Sat, 03/22/2014 - 19:35 | 4581117 kaiserhoff
kaiserhoff's picture

Heysoos, the Nazerene.  Verily I say unto thee, there are many present here, who shall not taste of death before..., blah, blah, blah...

Sat, 03/22/2014 - 19:34 | 4581118 CrashisOptimistic
CrashisOptimistic's picture

The end of the world is when the last human dies.  Let's agree on definition.

6 billion out of 7 billion humans dying is thus not the end of the world.  That's what's coming.  Fairly soon, too.

Sat, 03/22/2014 - 19:56 | 4581161 Chief Wonder Bread
Chief Wonder Bread's picture

THat seems likely. Who goes and who stays is the only issue. You can slice and dice it any way you want. By nation, region, tr_ _e, income level, education level, occupational specialty, age, sex, access to remaining resources...

I hate to even think about it but the pain won;t be evenly distributed.

Sat, 03/22/2014 - 21:24 | 4581370 Yes_Questions
Yes_Questions's picture

 

 

In a world after people, cockroaches, ferral dogs, and ZH Posters live in abundance.

See you on the other side.

 

I'll be the one with the tail.

Sun, 03/23/2014 - 10:36 | 4582167 Obese-Redneck
Obese-Redneck's picture

May your McMansion always have central air.
May your monster trucks tank always be full.
May your gargantuan fridge and freezer always be full.
May your electric towel warmer always be toasty.
May your 4 bathrooms always have TP.
May your heart shape ensuite jacuzzi always be foamy.
May your 90 inch flat screen always have 1000 channels.
May your pool always be chlorinated.
These are the simple dreams of a simple people.

Sun, 03/23/2014 - 11:57 | 4582374 Flakmeister
Flakmeister's picture

Sad but oh so true....

Sun, 03/23/2014 - 15:26 | 4582990 Errol
Errol's picture

Mr Redneck, thank you! I actually did LOL...

Sun, 03/23/2014 - 12:35 | 4582478 AGuy
AGuy's picture

"6 billion out of 7 billion humans dying is thus not the end of the world. "

That all depends. If your one of the 6 Billion then its the end of the world for you!

Consider that there are 440+ nuclear reactors around the world. Each has a spent fuel pool containing enough waste material to render a radius of 1000 miles inhabitable. These spent fuel pools need constant cooling and attention, Disruption more than a week or two risks that a spent fuel pool will catch fire. Japan dodged a bullet since its Small Spent Fuel pool in Reactor 4 did not collapse. Had that single SFP collapsed All of Japan would have been render inhabitable. It would have also resulted in chain reaction, as It would have eliminated the support for Japans other reactors, eventually leading to the rest of Japans SPF from also catching fire. Japan's SFP's alone would render all of Asia and the Pacific inhabitable.

Our Nuclear Plants are the doomsday machine from Dr Stranglelove. Not only can this doomsday machine be triggered by war, it can also be triggler by an economic collapse, regional natural disaster, or any situation that brings down a grid for an extended period.

It seems very inprobably that humanity, or any vertibrates will survive a collapses as these SFP will render the entire globe inhabitable.

"That's what's coming. Fairly soon, too."

I hope not!

 

 

Sun, 03/23/2014 - 15:34 | 4583011 Errol
Errol's picture

AGuy, here's one of the dots for you: there is limited intermixing of atmosphere between the Northern and Southern hemispheres.  Here's a second dot: the vast majority of nuclear plants and weapons are in the Northern Hemisphere.

Here's a bonus dot: former CIA chief Daddy Bush owns a huge estancia in the Southern part of Argentina.

Feel free to connect the dots any way that comes to mind...

 

Sun, 03/23/2014 - 15:55 | 4583051 AGuy
AGuy's picture

"Limited intermixing of atmosphere between the Northern and Southern hemispheres"

The Oceans will become complete contaminated, and there will be enough contamination between the hemisphere to kill everyone in the south.  There is no escape.

" former CIA chief Daddy Bush owns a huge estancia in the Southern part of Argentina"

Few of the rest of the elite have estates in the Southern Hemisphere. I would say 99% of the .1% are completely clueless about the dangers of the SFPs.

 

 

Sat, 03/22/2014 - 20:35 | 4581245 ebworthen
ebworthen's picture

Well, plot the rise in population to those dates and you might get to the real "oops!".

Sat, 03/22/2014 - 22:37 | 4581524 mickeyman
mickeyman's picture

Are you sure it didn't happen?

Sun, 03/23/2014 - 01:10 | 4581772 babarian gourd
babarian gourd's picture

The Myans and John Cusack 2012 A.D.

Sat, 03/22/2014 - 19:50 | 4581143 Kreditanstalt
Kreditanstalt's picture

Must be one of these "technology will solve all our problems and we can continue driving to the mall as ever" types...

Sat, 03/22/2014 - 20:39 | 4581256 CrashisOptimistic
CrashisOptimistic's picture

If you're an American, choosing to conserve and not drive to the mall is just saving gasoline for some Chinese or Indian.

No point in inconveniencing yourself.

Sat, 03/22/2014 - 21:06 | 4581316 Matt
Matt's picture

That is assuming there is nothing better that you could be allocating your finite resources towards, rather than driving to the mall.

Sun, 03/23/2014 - 12:08 | 4582405 Seer
Seer's picture

Yeah, I'm doing my best to burn through it so we can get this thing started on the next cycle...

But seriously, you've got a point.  Energy-importing nations are going to really feel the pain (can you say "Ukraine?" or "[in general] European ones?").

Location, location, location...  Food, Shelter and Water.  One need only compare the historical norm (of humanity) against what you see/have to figure out how one's situation is going to be entropically adjusted...

Sat, 03/22/2014 - 23:07 | 4581568 teslaberry
teslaberry's picture

i up voted you -----even though i disagree with you. 

 

ZH definitely does not deserve better. you are giving it too much credit. the 1/3 of articles that are decent on ZH are more than sufficient to make for the 2/3 of shit like this. 

 

if there is a meaninful analogy to be made it's that looking for useful news on most of the internet blogosphere is like mining in ore deposits with less than .01%  metal concentration. 

 

zh mining is like  mining fore 33% concentrated ore.  

naked capitalism is like  1% concentrated ore. 

MSM on television and WSJ/NYT is more like reading for propoganda to study the propoganda offensive. and for that reason a seemingly more worthwhile activity than going to blogoreah anular news distribution sites like naked capitalism. 

but yes, it is luddite nonsense. people are led to believe that oil coal and hydrocarbons are unsustainable because they are slowly poisoning us and becomign more expensive. even though---peak oil has been thoroughly debunked , and 'peak cheap' oil has itself been a complex dynamic theory of the price of exploration and likely future discoveries-------people just want to believe that the world is ending because they don't like it. 

 

try walking on a superfund site. i have. it's totally sustainable when you live on a massive continent with devleoped superstructure government  and transport systems----- like the usa russia or brazil. after you lay waste to one area-----just gate it off and move on to the rest. there's plenty!

the only time you really do run into problems is when you live on an island, or have limited real estate. japan's fukushima herpes infestation seems to be a problem for the japanese. but even they can deal with the cancer rates going up. there's 120 million of them. oh yea, even on a small creeping cancer radius of an island like japan---------where the choice real estate is becoming slowly irradiated-----and the ocean for hundreds of miles , sick with radiation concentrating in a diluted layer on the seafloor----- humanity can deal with it. a few people die and the rest move on. the human termite itself may be weak, but nest extraodinarily strong. and the group of nests , nearly unstoppable for this epoch of history. even world war 3 won't stop this bitch.

it is more than obvious that the next few hundred years of human history will see the most unbelievably rapid devleopment and consumption of global forests , fisheries, and everything we have left. this cilvilzation aint done yet! not by a long shot.

a full scale nuclear war would probalby only set the world back by 20-30 years until full rebuilding brings the globe back to an even stronger, more rapidly progressing, technological beasting. 

.

you know whose fucked? elephants, whales, bears, wolfs, and large animals generally.

 

peak oil. no . peak species.  yes.

 

 

Sun, 03/23/2014 - 08:06 | 4581928 Headbanger
Headbanger's picture

Wow!   That's excellent!  

However, (just to have one)  I suspect that Mother Nature has a way to deal with us humans getting out of control killing off other species. Like some incurable disease. And I suspect this is also what's causing evrybody to be gay so we don't reproduce as much. And look at Japan where many young men have no interest in sex one way or the other.

But it's more likely we will see a huge spike up in the rate we kill each other cause we're getting sick of each other on a global scale. Either that or the Ancient Aliens return en mass and erase us when they see we're so fucked up as a species.

Sun, 03/23/2014 - 12:13 | 4582415 Seer
Seer's picture

Wars will increase because of resource sarcity.  The "hate" is more about an excuse to fight someone (to the death) over resouces.

That which cannot coninue forever won't...

Sun, 03/23/2014 - 13:06 | 4582597 rum_runner
rum_runner's picture

Wars don't have any meaningful impact on population.  From wikipedia "The world population has continuously grown since the end of the Great Famine and the Black Death in 1350, when it was near 370 million."

 

So there you have it.. unless we unleash massive nuclear war, war will not slow down population growth.

Sun, 03/23/2014 - 17:33 | 4583278 Seer
Seer's picture

"Wars don't have any meaningful impact on population."

Care to speculate what things would be like without the decreases in population from all the big wars?

But, clearly, we've been more cooperative/tolerant than combative: that's the point made by Peter Kropotkin in his book Mutual Aid.

Sun, 03/23/2014 - 12:36 | 4582482 SRSrocco
SRSrocco's picture

"mindless Luddite propaganda"  Funny, when individuals can no longer comprehend real data and information as it pertains to limits to growth on a finite planet.

I gather the individual who made this comment has no idea whatsoever the serious condition of the world's oceans.  Again.. failure to comprehend important data.

This is the problem with the world today.... LEFT HAND KNOWS NOT WHAT THE RIGHT HAND IS DOING.

Sat, 03/22/2014 - 18:18 | 4580968 Smegley Wanxalot
Smegley Wanxalot's picture

Unitless.  So kinda like Yellen.

Sat, 03/22/2014 - 18:21 | 4580974 chemystical
chemystical's picture

"Its a ratio so its unitless."

Where the fuck did you get the idea that ratios are ispo facto unitless?

What about this ratio:

clueless poster per zero hedge poster.

with all due respect of course

Sat, 03/22/2014 - 18:25 | 4580984 Flakmeister
Flakmeister's picture

Wow...

This might be one of the greatest Poe's ever...

Sat, 03/22/2014 - 18:40 | 4581009 css1971
css1971's picture

What is a poster divided by a poster?

1

No units left remaining. Though the context of the ratio is posters it doesn't refer to a specific number of them. e.g. 4 posters. and is therefore unitless. Units are a count of things. in this case, the count of the number of posters. The ratio of 1:2 clueless posters to total ZH posters doesnt tell you how many there actually are of each, so you don't have a count of things.

Sat, 03/22/2014 - 19:21 | 4581089 chemystical
chemystical's picture

The fact that units might cancel during dimensional analysis is not relevant to the OP's question or to the graph. 

A ratio of 1:2 WITHOUT UNITS in the instance to which you (and I) referred is nonetheless a reference to zerohedge posters.  60 secs/1 min might be unity, but it doesn't mean that time disappears.

The graph would provide more information if it provided vector in addition to scale if you will.  What is DID do (and misleadingly so) is to use the term "unit" whilst FAILING to state what that unit is.

 

Sat, 03/22/2014 - 20:17 | 4581202 css1971
css1971's picture

The context of the graph is pretty clear. It's a ratio of waste to ore concentration. By definition you'll get X amount of waste for concentration Y, multiplied by grams, kilos, kilotonnes, megatonnes. The actual number of units is not the point but to show the increasing waste relative to the amount produced. Use whatever units you like the ratio remains the same and will remain similar if not exactly the same for small producers of a few thousand kilos vs producers of tens of thousands of tonnes. Indeed, the scary part about this is it applies to multiple different resources, equally to gold, copper, iron where the units are on entirely different scales, all are being depleted and are ruinning up that curve.

Also consider the audience. It's not a scientific, or industry paper, it's a blog explaining the problem. Including the units can be distracting, particularly if the numbers vary from source to source. You end up getting arguments over whether source A's 1.9 million tonnes figure is better than source B's 1.6 million tonnes, when there's now ~180 million tonnes of waste being sifted to extract the resource.

Sat, 03/22/2014 - 18:41 | 4581006 chemystical
chemystical's picture

"Units of waste production per 100 units of metal.

Is that in femto metric tons per cubic furlong? Metric or english system?

A valid question.  The salient question is, "What is a unit?"

It's an ill-used term in the graph.  If the intent is to show relationship, then define it.  If the suggestion is that both the x and y have the same scale, then why use the term "unit"?  I tend to dismiss such as either sloppy or rubbish (or the product of voodoo scientists with an agenda that outpaced their education)

The number of your detractors is pathetic.

Sat, 03/22/2014 - 19:48 | 4581140 Matt
Matt's picture

units of waste per 100 units of metal.

You can use any units you want, and apply the ratio.

100 Kg of iron makes 20,000 Kg of waste.

100 short tons of iron makes 20,000 short tons of waste.

100 grams of iron makes 20,000 grams of waste.

100 pounds of iron makes 20,000 pounds of waste.

Just go to which ever point in time you want, use whatever unit you want, and apply the ratio.

Sat, 03/22/2014 - 19:51 | 4581147 Matt
Matt's picture

X axis is ore grade; that means how rich the ore is in the desired metal, versus how much waste there is. As you move to poorer grades of ore, the ratio of waste to end product increases.

Normally, I'd assume 0.2 means 20 percent, so 20 percent iron and 80 percent not-iron. At which point, to make 100 units of iron, you would make 400 units of waste. The chart could use a bit more clarity, but you still can get the basic concept.

Sun, 03/23/2014 - 12:43 | 4582508 Seer
Seer's picture

Bill? is that you?

"Depends on what the meaning of "is" is."

Sat, 03/22/2014 - 18:41 | 4581010 Berspankme
Berspankme's picture

The goal of our masters is NOT to raise the standard of living. When you raise your standard of living, you experience a sense of freedom. This is ungood for our masters. They want serfs, barely hanging on and willing to lick their masters balls to get a little overtime.

Lowering the standard of living for the american middle class has long been the goal. The can't have uppity peasants.

Watch what your masters DO, not what they say

Sat, 03/22/2014 - 20:00 | 4581173 Matt
Matt's picture

I think you are completely wrong. People who have a wife and kids and a house with mortgage and two cars and a full time job do not riot and try to overthrow the system.

People who cannot afford a loaf of bread and have nothing to lose, try to overthrow the system.

 

Sat, 03/22/2014 - 20:26 | 4581221 Berspankme
Berspankme's picture

that's why they provide bread and circus

Sat, 03/22/2014 - 22:41 | 4581534 mickeyman
mickeyman's picture

Exactly. They will offer you credit so you can buy a house. A nice, big house, so you are happy, but need to work for 30 years to pay it. They will not finance an imaginative builder that might build small townhouses that could retail for $50k. It's no good having the serfs pay mortgages for only a handful of years.

Sun, 03/23/2014 - 12:46 | 4582522 Seer
Seer's picture

Meanwhile, in reality (and the historical norm), most folks on the planet have no such option.  Kind of hard to determine which is worse...

Sun, 03/23/2014 - 12:44 | 4582515 Seer
Seer's picture

And in all empires people come to expect that there will forever be plenty...

Sat, 03/22/2014 - 18:00 | 4580939 DaveyJones
DaveyJones's picture

"Why Haven’t Governments Told Us About these Difficulties?"

it might reveal their war strategies

Sat, 03/22/2014 - 18:29 | 4580992 Flakmeister
Flakmeister's picture

No, those are obvious, but they might tell us when...

15 years give or tack...

==========

At last look over 7 out of every 10 barrels of new production in the US shale plays are required to replace decling production of existing wells...

If that does not signal the inevitable, what else could?

Sat, 03/22/2014 - 22:42 | 4581536 mickeyman
mickeyman's picture

Just wait until 12 out of every 10 barrels of new production are required to replace declining production!

Sun, 03/23/2014 - 11:58 | 4582378 Flakmeister
Flakmeister's picture

That will be about 2020....

Sat, 03/22/2014 - 18:03 | 4580942 kaiserhoff
kaiserhoff's picture

Whatalotofcrap.  Technology changes all the time.  We already have a workable substitute for oil,  natural gas.

We need less government, and fewer urban, lefty know it alls preaching to the last few producers.

Sat, 03/22/2014 - 18:04 | 4580946 Flakmeister
Flakmeister's picture

Trolling pretty hard, eh?

Sat, 03/22/2014 - 19:54 | 4581154 Spastica Rex
Spastica Rex's picture

Yet again, I missed the fun discussion.

I'm always a day late, and barrel short.

:(

Sat, 03/22/2014 - 21:03 | 4581304 greatbeard
greatbeard's picture

>> I'm always a day late

IMO, it's never too late to say something stupid.

 

Sat, 03/22/2014 - 19:38 | 4581122 CrashisOptimistic
CrashisOptimistic's picture

Wait, what?  When did methane become a result of technology?

Sat, 03/22/2014 - 21:32 | 4581395 Yes_Questions
Yes_Questions's picture

 

 

you like dancing with the devil in glow of gas-flare light?

 

 

 

 

Sun, 03/23/2014 - 12:52 | 4582546 Seer
Seer's picture

Technology is a PROCESS.  It's a "formula."  You have to have inputs in order to get outputs.  Finite planet means finite stuff.

Jevons Paradox.  Look it up.

Human hubris.  Well, read what you're writing...

Natural gas is another hydrocarbon.  NG wells deplete much more rapidly than oil (liquids).  It's also less energy dense than oil.  Try running a bunch of trucks, tractors, ships and locomotivesoff of NG.

"We need less government, and fewer urban, lefty know it alls preaching to the last few producers."

So, you're looking at population reduction to "solve" the problem?

Sat, 03/22/2014 - 18:03 | 4580945 Flakmeister
Flakmeister's picture

This is old news to anyone who read Limits to Growth back in the early '70s....

Sat, 03/22/2014 - 18:04 | 4580947 kaiserhoff
kaiserhoff's picture

Flak, yo momma called.  Time for your weekly bath.

Sat, 03/22/2014 - 18:07 | 4580953 Flakmeister
Flakmeister's picture

You may disagree with me, but I ain't so stupid to suggest that NG is a replacement for oil...

Saying that only reveals the extent of your ignorance...

So run along little ignorant troll....

Sat, 03/22/2014 - 20:07 | 4581190 Matt
Matt's picture

Natural Gas can be a substitute for oil, at about a 2:1 BOE ratio, with large capital expense. You can synthezise pretty much any hydrocarbon you want with Gas-To-Liquid.

Probably a better idea than converting all the infrastructure and vehicles over to using natural gas directly.

Maybe even better than burning the natural gas to make electricity to power electric cars, which has to lose at least 50% with all of the conversion and transmission steps, plus the weight and embedded energy in the batteries.

Sat, 03/22/2014 - 20:23 | 4581212 CrashisOptimistic
CrashisOptimistic's picture

Measure the expense in joules, not dollars.

Sat, 03/22/2014 - 20:29 | 4581234 Matt
Matt's picture

2 Barrels of Oil in Equivelent Natural Gas can be made into 1 Barrel worth of Gasoline through Mobil Process. That is measured in energy. 

Do you think natural gas cars or electric cars are a superior choice?

Sun, 03/23/2014 - 11:15 | 4582257 Flakmeister
Flakmeister's picture

Remind us of how many mCF of gas is one BOE...

Sun, 03/23/2014 - 12:30 | 4582458 Matt
Matt's picture

6.

6000 cubic feet of natural gas is about one BOE

so it would take 12 000 to 20 000 cubic feet of natural gas to make about  42 US gallons of gasoline.

At a commercial rate of $10 USD per 1000 cubic feet, it would cost $120 to $200 to make 42 gallons of gasoline, about $5 per gallon. This is not including the cap ex and operational costs of the facility.

This is worse than current gasoline price, but that is not what we are comparing. What are the costs and losses for using natural gas or electricity to power transport in comparison?

 

Sun, 03/23/2014 - 12:47 | 4582525 Flakmeister
Flakmeister's picture

BTU arbitrage to produce high value liquids will profitable for some time assuming that you have the plant already built...

Electricty is the most efficient but not the most pratical by far...

Sun, 03/23/2014 - 15:06 | 4582932 Matt
Matt's picture

Electricity would work great if we used trolleys. Just have overhead rails, and use trolley trucks and buses. This eliminates the battery stage altogether. Even personal automobiles could run on trolleys, and once vehicles are fully automated, we could then reduce the mass of the vehicles substantially. Unfortunately, I doubt this is the solution that will be implemented.

I suspect it would require less resources to put powerlines over roadways, then to build out natural gas infrastructure, and vastly superior to running millions of vehicles on batteries.

Sat, 03/22/2014 - 20:24 | 4581214 css1971
css1971's picture

You don't have to lose 50%. You can put it to another use. See Denmark, Finland's power station efficiencies as an example.

Sat, 03/22/2014 - 20:33 | 4581239 Matt
Matt's picture

Are you going for switching all transportation to electric, then?

If we were using 75 pound velomobiles instead of 4000 pound SUV, electric would certainly be an excellent choice. I am not convinced switching over to 6000 pound electic SUV is the answer.

Also, oil is used for a great deal more than just electricity and transportation fuel. If we have to go to growing algae for plastics, waxes, parafins, lubricants, paints, etc, a lot of things we take for granted could be out of reach for most people.

Sun, 03/23/2014 - 12:54 | 4582550 Seer
Seer's picture

A former Shell exec (CEO?) has been lobbying in DC for methanol.  Desperate times call for desperate measures.  And, I'm sure that desperate measures will end up producing desperate results...

Sat, 03/22/2014 - 18:18 | 4580971 css1971
css1971's picture

Early 70s I was still in diapers.

Sat, 03/22/2014 - 21:48 | 4581432 Yes_Questions
Yes_Questions's picture

 

 

We can't all be as old as you.

 

;

Sun, 03/23/2014 - 04:18 | 4581904 Bearwagon
Bearwagon's picture

Yeah, these are news, old enough to be good ... or likewise ... And as you probably know all too well, anyone who read it back in the days has been doomed to helplessly stand by while nobody else pays any heed to the facts mentioned in the book. The exception proves the rule.

Sat, 03/22/2014 - 18:05 | 4580948 Flakmeister
Flakmeister's picture

The Kopits link she refers to is top shelf and strongly recommended....

Sat, 03/22/2014 - 18:30 | 4580993 disabledvet
disabledvet's picture

"oil is an economy unto itself." the economics people (including the ones on the right I might add) all complained about "oil prices hurting demand"...but once they soared (and overplayed with trillion dollar deficits) suddenly "high oil prices are good."

and that "in a nutshell" is the economics profession.

it is ironic since the whole "entity" simply ignores banking and "how credit is extended." Obviously the oldest and still the best is to simply generate inflation. it is ironic that we have a President from Chicago who is standing idly by while prices of food surge (yet again) and energy doubles.

this is not peacetime mind you...but in the middle of a war.

so sure..."we've got tech people showing up to talk business"...and yes, they have a solution to the "energy crisis"...but it's not lower energy prices.

those high oil prices are pushing their equity prices through the roof..and moving the equity market to the moon as well.

so to keep it simple "the biggest consumer of oil is the Federal Government itself" and "what happens to that thing once they don't have oil?"

2008 gave a taste of that (trillion dollar deficits forever) and it is rather "beyond disbelief" that the dollar has survived that collapse "with nary a scratch."

So now we have a "showdown"...one President with 70% approval ratings, the other with 30.

Hmmmm. "And all problems now sitting on the table of the JCS and O Ring" I imagine and "as usual."

It should be pointed out the US still has an Admiralty...and so does Great Britain.

Sat, 03/22/2014 - 19:39 | 4581125 CrashisOptimistic
CrashisOptimistic's picture

Rumor floating around that he got fired when that link went viral.

Sun, 03/23/2014 - 11:44 | 4582343 Flakmeister
Flakmeister's picture

I hope that isn't true...

Sun, 03/23/2014 - 11:59 | 4582380 Flakmeister
Flakmeister's picture

Be sure to look at the slides there as well...

Sat, 03/22/2014 - 18:12 | 4580952 Black Forest
Black Forest's picture

A major concern is that the treadmill of rising costs will speed up further in the future. If it is hard to keep up now, it will be even harder in the future. 

<Useless relpy removed.>

Sat, 03/22/2014 - 18:13 | 4580961 wstrub
wstrub's picture

Our economy is not growing because those at the top have most of the marbles and continue to hoover the ones  scattered about.  There needs to be a more equitable distribution of wealth.  The distortion at the top is extreme.

Sat, 03/22/2014 - 18:27 | 4580988 chemystical
chemystical's picture

"Our economy is not growing..."

Key word being "our".  "Our economy" as opposed to "their economy".

The distinction is what you're talking about.

Their economy is doing quite well, and it's nowhere near a "in the land of the blind the one-eyed man is king" situation.  "They" are doing better than ever.

Key question is, "Who are they?"  Until you define "they" you have no model to reclaim what you believe to be yours.

 

Sun, 03/23/2014 - 12:58 | 4582567 Seer
Seer's picture

And, praytell, how can you "reclaim" that which doesn't exist?

Everyone is anxious to start some revolution yet no one can say what is to happen AFTER (other than life will be great and we'll get to hang out with unicorns and shit).

Hang all the bastards and we're STILL dead broke and rapidly depleting resources.  I often think that TPTB provide a great excuse for people to NOT do stuff in preparation.

Sat, 03/22/2014 - 18:17 | 4580966 css1971
css1971's picture

My entire life since ~2005 has been directed by approximately this realisation.

The problem is many don't "get" that productivity is the leverage of human effort by machine effort and therefore is energy (oil) based. They're just not able to observe how the world works mostly.

ok as an example. They opened a couple of miles of new road near where I live. It took them about 9 months to build, including huge embankments and overpasses. There were maybe 10 people working on the road at any one time, and that's probably an exaggeration. The level of productivity I saw each day was enormous. Each of those men moved enormous amounts of earth around using huge machines.

That increasing productivity is what allows us to pay our debts. If it doesn't keep increasing, then the debts are bad, and the entire financial system is inevitably bankrupt, though it'll take a while for them to acknowledge it..

So. To follow that logic further... If the entire financial system is bankrupt but doesn't know it yet, what will the politicians do as realisation dawns on them over the next couple of decades and it replaces Global Warming as the crisis du jour?

Martenson's basically got it nailed and put it in a better format than I ever could.

Sat, 03/22/2014 - 18:40 | 4580977 Flakmeister
Flakmeister's picture

Yes, it is bankrupt for all intents and purposes....

And in about 10 years when it has become clear to any sentient human being that we have hit the oil wall is exactly when the effects of Climate Change are going to really kick in...

I'd call for popcorn but this show ain't gonna be pretty...

Sat, 03/22/2014 - 18:48 | 4581026 Poor Grogman
Poor Grogman's picture

Ah yes the "evidence free" link between peak oil, and climate change, would have to foul this dubious thread sooner or later.

As if somehow Gaia is far more scary if these two (THEORYs) are bundled together.

Look out folks! Gaia herself will turn against humans if they use all the oil!

Sun, 03/23/2014 - 10:45 | 4582182 Obese-Redneck
Obese-Redneck's picture

And oil is at 100 dollars, why? Because there is so much right? Or there is so much Chinese demand? Which is it?

Sat, 03/22/2014 - 19:55 | 4581155 chemystical
chemystical's picture

"And in about 10 years when it has become clear to any sentient human being that we have hit the oil wall is exactly when the effects of Climate Change are going to really kick in"

M. King Hubert, the patron saint of "peak oil" stated that peak oil would be reached in 1995.  Then he revised that to 2000.  IEA's current model has it at 2035. 

Now the charlatan du jour tells us that in "about 10 years" we'll have hit the oil wall (whatever that nebulous phrase is supposed to mean), AND that climate change (genuflect when you say that) will really kick in!

You need to start your own blog and invite the Bitcoiners to join you with theie predictions of 1 million USD per Btc sometime soon.  Others crawl way out on the limb and will say 5000 USD before this year's end.

Seriously, if you folks are so worried about these catastrophes, then do the rest of us a favor and stop encouraging the "waste" of resources and throw away your PC and cell phone and cars and homes and please stop eating food while you're at it.  Stop having children.  etc etc

Unless of course you and "Al Gore" are permitted the luxury of jetting around the world to warn us of the perils of jets.  FUCKING WANKERS THE LOT OF YOU

Sat, 03/22/2014 - 20:14 | 4581199 Matt
Matt's picture

If I'm not mistaken, Hubbert's original call was for peak production of light sweet crude from conventional shallow wells in the continental United States to occur around 1969.

I'm sure the IEA 2035 call is based on Barrels of Oil Equivelent, using any liquid that might kind of resemble oil, extracted from any source available, at any EROEI greater than 1.

Sat, 03/22/2014 - 20:27 | 4581224 css1971
css1971's picture

OIl peaked in 2005. We hit the wall in 2008. Now it's all down hill.

Sun, 03/23/2014 - 10:47 | 4582184 Obese-Redneck
Obese-Redneck's picture

1/3 to 1/2 of ZH readers are of fanatical religious extraction, don't burst their Cornucopia, they get bent.

Sun, 03/23/2014 - 11:50 | 4582359 Flakmeister
Flakmeister's picture

To put it a tad more precisely:

Production of conventional oil peaked in 2005 and is now down 1 mmbpd despite throwing 3.5 trillion in CAPEX at the problem...

Hubbert predicted the global peak to be about 2000 away back when...

The "shale revolution", now about 2 mmbpd and looking toppy is the equivalent of 1 week rehab in a methadone clinic for a lifelong junkie....

Sun, 03/23/2014 - 13:01 | 4582578 Seer
Seer's picture

Most people cannot comprehend the amount of work that a diesel engine can be made to do.  I can get enormous amounf of work done with my tractor and just a little bit of diesel, whereas if I were to do that work by hand it would likely take me weeks (rather than say an hour with the tractor).  And when I can no longer afford diesel?  Not looking forward to that day...

Mon, 03/24/2014 - 17:33 | 4587328 Citxmech
Citxmech's picture

That ain't no shit Seer.  Last weekend I launched a new battle on the blackberries that I've been trying to get a handle on for 6 months by hand.  With one old tractor and an old flail mower, after about 3 hrs, I was running out of blackberries to mulch.  

Once diesel is in short supply, I hope we're ready to be long goats. . .

Sat, 03/22/2014 - 18:17 | 4580967 nakki
nakki's picture

I've said this to anyone who'll listen to me. The entire world cannot live the way that the US has lived for the past 70 years. How could China and India ever have what we would consider a middle class. If 50% of the Chinese and Indians where to live the lifestyle that most, even poor Americans lived, oil would be close to $200 a barrel. Imagine another billion people with a car 2 TVs eating as much peotien as a normal American does. Don't think its going to happen unless the strides in alternatives expands exponentially.

Sat, 03/22/2014 - 20:10 | 4581191 chemystical
chemystical's picture

"...oil would be close to $200 a barrelImagine another billion people with a car 2 TVs eating as much peotien as a normal American does."

Imagine that gasoline needn't only be refined from oil.  Sequestered CO2 + hydrogen = MeOH > gasoline.  The point at which that becomes feasible is near $ 4.50/gal.  You won't see the infrastructure built until gas prices are consistently close to that. 

Nat gas can pump those pistons up and down too.  Widespread infrastructure will be built when the profit is more certain and gasoline's epitaph is more clearly written.

CTL and GTL are already putting billions into Shell's coffers.

Less energy than ever goes into mfg a television.  Ditto operating it.

Food is a wild card.  Whether "Monsanto" "Frankenwheat" can grow on concrete (euphamism for environs previously thought to be less than hospitable) is more of a certainty than whether it will poison our DNA.  Whether we adapt evolve around that is not really a question.  It's a foregone conclusion. 

So called 'progressives' sure seem to want things to remain the same.

Sat, 03/22/2014 - 20:28 | 4581230 CrashisOptimistic
CrashisOptimistic's picture

CTL and GTL are not putting billions into Shell's coffers.

Sat, 03/22/2014 - 20:38 | 4581253 Matt
Matt's picture

According to this, they should be making billions on the Pearl GTL:

http://www.gastechnews.com/unconventional-gas/gas-to-liquids-on-the-thre...

Sun, 03/23/2014 - 00:06 | 4581694 CrashisOptimistic
CrashisOptimistic's picture

Look this is not even debateable.

CH4 is 4 CH links.  That's where the joules are.  Breaking the links.  Oil is a LOT of CH chains.  Many, many more links.  If you want to convert CH4 to CHCHCHblahblahCHCHCHCHblahblahCHCHCHCH you have to add that energy into the process.  It's not magic.  If you store it in a link, you have to put it there.  And you'll do it inefficiently, just like 80 million years of heat and pressure did.

As for Pearl, it's in friggin Qatar and the CH4 is flowing in free for the purpose of the test.  Qatar isn't charging for the gas or any transport of it were the plant somewhere else.  After all that, they are getting a lousy 120K bpd of oil out of it before the OTHER considerable costs that eat up that revenue and guarantee they are NOT getting billions.

This is just silly.

 

Sun, 03/23/2014 - 02:02 | 4581818 Matt
Matt's picture

Do you believe that retrofitting fleets of heavy trucks to run on natural gas, and building out the natural gas infrastructure, is a better option?

Or electricity? Or horse drawn carriages? Or coal powered trains?

We have to use what we have, not what is ideal.

 

Sun, 03/23/2014 - 02:17 | 4581833 CrashisOptimistic
CrashisOptimistic's picture

What we have is weapons.  There is no requirement that one side allows the other side to burn oil and then endure the inconvenience.

Sun, 03/23/2014 - 10:50 | 4582191 Obese-Redneck
Obese-Redneck's picture

Endure the inconvenience, this sums up modern American life folks. Give me convenience or give me death- Jello Biafra.

Sun, 03/23/2014 - 12:43 | 4582506 Matt
Matt's picture

You think open war is a possibility in an age of nuclear weapons? I doubt it. More like Cold War 2.0 and a slow, steady grind downwards.

Sun, 03/23/2014 - 17:41 | 4583294 Seer
Seer's picture

"We have to use what we have, not what is ideal."

It's a matter of EROEI.

Would you go digging for that burried Snickers Bar of 300 calories if it took 310 calories to get it?  You're hungry, right?

Mon, 03/24/2014 - 06:38 | 4584767 Matt
Matt's picture

If I was burning 310 calories of something not edible, in exchange for 300 calories of edible, yes.

Are you claiming that natural gas is already down to 2:1 EROEI or less? 

Sun, 03/23/2014 - 13:03 | 4582588 Seer
Seer's picture

There are 750 MILLION in India living on $0.50/day!  That's nearly 2 1/2 times the entire population of the US!

Sat, 03/22/2014 - 18:19 | 4580972 Gusher
Gusher's picture

We have been reading this story every ten years going back 100 years.  I do recall the experts at theoildrum.com swearing on the bible, stick a needle in your mom's eye that the year 2006 was the peak in oil production.  That genius Jimmy Carter largely said the same in the late 1970's.  Folks, oil is not expensive now. Not one bit. It's our incomes that are dropping like a rock. Crony capitalism is a total failure.  Lets try the real thing.

Sat, 03/22/2014 - 18:22 | 4580979 Flakmeister
Flakmeister's picture

What a bunch of folksey drivel...

Sat, 03/22/2014 - 18:26 | 4580983 css1971
css1971's picture

World oil production peaked in 2005. US oil production peaked in 1971,

Haven't you noticed declining US prosperity? You are right though, oil is not yet expensive. Here's the thing though. The economy is driven by the people at the margin. By that, I mean the people who have to decide whether it's worth driving 5 miles to a job vs driving 10 miiles. They are the ones who decide if the economy goes up, or the economy goes down.

Sat, 03/22/2014 - 19:53 | 4581152 GeorgeHayduke
GeorgeHayduke's picture

Don't bamboozle them with reality and facts css1971. These guys get their facts from Faux News where all facts are created to keep conservatives comfortable in their biases and world view. Exposure to ideas outside of that comfort zone must be rejected immediately and belligerently for fear of allowing a new thought to interrupt the 20 idea limit on the playlist constantly running in their head. Oh well, reality doesn't care about their ideology and will proceed forward leaving the conservative thinkers behind like it has done throughout history.

Sat, 03/22/2014 - 20:06 | 4581187 Shad_ow
Shad_ow's picture

Yes, it is declining but oil isn't the cause.  Corruption, greed, and graft is the problem.  That isn't going away and the economy is doomed because of it.  Unless that is corrected and guilty held responsible there will be no turn around ever.  Blaming a commodity for the fall of our country is as absurd as blaming a gun for a murder.

Sun, 03/23/2014 - 10:52 | 4582202 Obese-Redneck
Obese-Redneck's picture

Not just any commodity. Oil to modern life is like crack to a crackhead.

Sun, 03/23/2014 - 11:37 | 4582319 SelfGov
SelfGov's picture

Holding the guilty responsible will not put more oil into the ground or make what is there easier to extract. Re-insert head into sand.

Sat, 03/22/2014 - 20:24 | 4581213 Kprime
Kprime's picture

hmmmm price of oil  in the 70s and 80s, about $30,  price of oil in 2006 about $30 per barrel.  Price now $100 per barrel.

Do I smell a peak somewhere in that shit?

Sun, 03/23/2014 - 00:37 | 4581739 Gusher
Gusher's picture

"Price of oil in the 70's about $30 a barrel". Price of oil in 1998 $15 bucks!!!!!!   Hey dolts, (those that disagree with me)...Oil will never be high compared to meat, cheese, copper, gold, land, etc.  Call me folksy you dolts. But don't blame me because America decided to completely trash the paper dollar.  Hence I stand by my earlier post.  Oil is not expensive.  Now take your peak oil theory and put it in the trash can where it belongs.  Face it, we our destroying our country by our foolish spending.  Price of oil $100 you say.  And that is a sign of what? Peak oil!?  Fool!   The Caandian dollar has gained 50% of the U.S. dollar over the decades. That alone should show you  it aint the oil. It's the U.S. dollar that is the problem

Sun, 03/23/2014 - 10:54 | 4582206 Obese-Redneck
Obese-Redneck's picture

Ummm...we import most of our oil from...ummm...Canada.

Sun, 03/23/2014 - 02:57 | 4581852 TheMerryPrankster
TheMerryPrankster's picture

What you fail to understand is oil and crony capitalism are linked. Our economy is a proxy  for oil. everything you wear, you eat, you drive, everything transported or grown everything that uses electricity is touched by oil.

Oil is the economy. The servers, the computers,the internet are all a product of an oil rich economy.

Oil is growing more expensive and getting harder to find, this inturn makes every other resource harder to get.

Economics is about allocating unequal resources. Cronycapitalism is the mechanism for using politics to allocate scarce resources unequally and unfairly.

Crony capitalism is a product of dwindling resources. We aren't just at peak oil, we are at peak civilization.

The question is how rapid the decline and how homogeneous the decline.

who dies first in this bizarre dance?

Sun, 03/23/2014 - 11:57 | 4582376 Gusher
Gusher's picture

The price of oil is virtually unchanged for 35 years in terms of gold, copper and Iowa farm land.  Checkmate.

Sun, 03/23/2014 - 17:44 | 4583305 Seer
Seer's picture

And meanwhile wages are falling and margins are compressing.

Economies of scale in reverse.

Thanks for playing!

Sun, 03/23/2014 - 13:10 | 4582616 Seer
Seer's picture

Before babbling one ought to actually understand the terms with which one is using...

"Peak Oil" has to do with "PEAK OIL PRODUCTION."

In 1971 the US oil production peaked.  Doesn't matter what Cater said or didn't say, it was FACT.

And, I figure, theoildrum was giving 2006 as the global oil production peak.  Here's some actual data to test this against:

http://www.indexmundi.com/energy.aspx?product=oil&graph=production

Clearly they missed it.  However, I suspect that they didn't figure the all-out frenzied oil shale and tar sands exploitation; I figure the glut of cheap credit (and subsidies) has allowed this.  When we look back we'll see that this unconventional play was extremely short-lived.  Do you feel lucky?

One last thing: "Peak Oil Exports."  If you're an energy importer then you hope that the oil exporting countries don't ramp up their internal consumption...

Sat, 03/22/2014 - 18:19 | 4580973 eddiebe
eddiebe's picture

The people making the rules and running the show know exactly what they are doing. Problem for you and me is they couldn't care less about you and me or about the planet/fauna/flora/water/soil/air being wrecked. Long as they get to live the good life, why make the needed changes?

Sat, 03/22/2014 - 18:20 | 4580976 robertsgt40
robertsgt40's picture

Climate change? Pleeez, give it a rest. BTW, whatever happened to global warming? With climate change all bases covered. Cold in winter, hot in summer. That's climate change.

Sat, 03/22/2014 - 18:24 | 4580982 Flakmeister
Flakmeister's picture

Anthropogenic Global Warming isn't quite so tasty, it doesn't slide off the tongue in quite the same way...

Sat, 03/22/2014 - 19:01 | 4581054 Poor Grogman
Poor Grogman's picture

Not rolling off the tongue is the least of the problems with AGW "theory".

The main problem is the ENTIRE THEORY is a complete crock of shit

Sat, 03/22/2014 - 22:57 | 4581562 Dickweed Wang
Dickweed Wang's picture

"Another part of the story relates to too much carbon released by burning fossil fuels, including oil, leading to climate change."

BULLSHIT!!!  The IPCC studies (via George Soros and his ilk) on "global warming", now called "climate change", were specifically structured to preclude anything other than human activities - so the impact on the climate from things like solar variability, volcanism and changes in water vapor in the atmosphere were never considered when the report's conclusions were made that 'carbon emissions from human activities and industry are causing global warming".  The executive summaries for the reports (to be used by governments in enacting climate change related legislation) were also produced before the actual "science" and technical work was completed - i.e. the reports were written to meet a preconceived thesis

Anyone who buys into this crap is a complete moron . . . . Ever heard of a thing called carbon credit swaps?  Just more Wall Street thievery!

Sun, 03/23/2014 - 12:19 | 4582264 Flakmeister
Flakmeister's picture

Making shit up I see...

Please point out to us where water vapor is explicity not considered...

And when making projections about the future it is very difficult to include the effect of volcanoes that haven't erupted yet...

IPCC only considers already published work....

So take your lies elsewhere...

Mon, 03/24/2014 - 13:54 | 4586215 DaveyJones
DaveyJones's picture

and IPCC takes very unanimous / conservative positions

Sun, 03/23/2014 - 13:14 | 4582629 Seer
Seer's picture

"Ever heard of a thing called carbon credit swaps?  Just more Wall Street thievery!"

Energy companies get subsidies.  Does that mean that the energy is or isn't a scam?

No fucking shit Sherlock, people will make money off of anything/everything.

Seems that logic is not folks' strong suit...

Sat, 03/22/2014 - 18:28 | 4580990 ebworthen
ebworthen's picture

The real house of cards is the excessive population built up upon petrochemical mechanized agriculture.

Too many people, not enough oil or water to maintain current population trends.

Sat, 03/22/2014 - 18:31 | 4580995 Flakmeister
Flakmeister's picture

What was the name of one of those 4 Horsemen again?

Sat, 03/22/2014 - 18:38 | 4581004 ebworthen
ebworthen's picture

Famine - and throw Death, Conquest, and War in there too (not necessarily in that order).

Billions living in urban clusters completely dependent upon petroleum and machinery for food and water.

No outhouse, no oxen, no well, no skills.  House of cards.

Peak humanity approaching.

Sat, 03/22/2014 - 18:45 | 4581015 Flakmeister
Flakmeister's picture

If I was making book, 2035 would be the over under...

Sat, 03/22/2014 - 21:21 | 4581363 greatbeard
greatbeard's picture

>> 2035 would be the over under...

Shit, I'll be 80 then.  I should be at my physical peak.

Sun, 03/23/2014 - 13:15 | 4582635 Seer
Seer's picture

Ha!  That's it!

Wines get better with age, so I'll just look to become a wino!

Sun, 03/23/2014 - 04:23 | 4581907 Bearwagon
Bearwagon's picture

Listen to this, dude: http://www.youtube.com/watch?v=QVExlaxaweo
Aphrodite's Child, "The Four Horsemen"     ;-)

Sat, 03/22/2014 - 20:17 | 4581201 GeorgeHayduke
GeorgeHayduke's picture

You mean to tell me those tar sands in North Dakota and Canada that will end up requiring 3.5 barrels of oil for every 4 barrels produced won't be able to keep up with demand?

But what about drill, baby, drill? You mean to tell we can't just punch a hole in the ground anywhere and have a gusher? It's all the fault of those communist environmentalist that we can't just drill anywhere and get oil aplenty. Forget about those petroleum geologists...I mean what do they know about this stuff? After all, some folks have an OPINION that oil is and always will be plentiful. So, it will be.

After all, when we damn near killed off the whales we switched from whale oil to petroleum. So, we'll just let that ever elusive "them" come up with the next big thing that'll get us beyond petroleum. Didn't you know that economics, technology and ingenuity has always beat nature's limits? Just like all of the anti-gravity devices we now have, and those Star Trek transporters we use all the time, and forget about the Second Law of Thermodynamics, we're more ingenius than some stupid law of physics. We've got perpetual motion machines everywhere these days. And those scientists who said it couldn't be done look like chumps now, right? /stupid denialist mindset

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