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Guest Post: What Peak Oil?

Tyler Durden's picture



Submitted by John Aziz of Azizonomics

What Peak Oil?

Is peak oil imminent? Lots of people seem to think so.

The data (released by BP a company who have a vested interest in oil scarcity) don’t agree. Proved reserves keep increasing:

The oil in the ground will run out some day. But as the discovery of proven reserves continues to significantly outpace the rate of extraction, the claims that we’re facing immediate shortages looks trashy.

Some may try to cast doubt on these figures, saying that BP are counting inaccessible reserves, and that we must accept that while there are huge quantities of shale oil in the ground, the era of cheap and readily accessible oil is over. They might cite the idea that oil prices are much higher than they were ten years ago. Yet this is mostly a monetary phenomenon resulting from excessive money creation beyond the economy’s productive capacity. Priced in gold, oil is still very cheap — almost as cheap as it has ever been:

The argument that the vast majority of counted reserves are economically inaccessible is fundamentally flawed. In the long run there is only one equation that really matters in determining whether oil is extractable, and that is whether there is a net energy gain; whether energy-in exceeds energy-out. If there’s a net energy gain, it’s feasible. Certainly, we are moving toward a higher cost of energy extraction. Shale oil (for example) has a lower net energy gain than conventional oil, but still typically produces five times as much energy as is consumed in extraction.

But the Earth’s extractable hydrocarbons will eventually dry up, whether that’s in 500 years or 200 years. If we want humanity to have a long-term future on Earth, we need to move to renewables; solar, hydroelectric, thorium, synthetic hydrocarbons. And the market will ensure that, eventually — as the cost of renewable energy continues to fall, more and more of us will adopt it. I don’t buy the myth that markets are stupid — if humanity needs renewable energy (I believe we do) the market will see to it (I believe that is slowly happening). Markets are just the sum of human preferences.

According to the International Renewable Energy Institute:

Power from renewable energy sources is getting cheaper every year, according to a study released Wednesday, challenging long-standing myths that clean energy technology is too expensive to adopt. The costs associated with extracting power from solar panels has fallen as much as 60 percent in just the past few years.The price of  from other renewables, including wind, , concentrating solar power and biomass, was also falling.

So no. I’m not lying awake at night worrying about imminent peak oil. There’s plenty of extractable oil, and renewable energy will eventually supplement and replace it. But will politics get in the way of energy extraction? The United States has huge hydrocarbon reserves, yet regulation is preventing drilling and shipment, leaving America dependent on foreign oil. And the oil companies themselves are largely to blame — after Deepwater Horizon, should anyone be surprised that politicians and the public want to strangle the oil industry?

If there’s an imminent energy crisis, it will be man-made. It will come out of the United States’ dependency on foreign oil. Or out of an environmental catastrophe caused by mismanagement and graft (protected cartels like the energy industry always lead to mismanagement). Or out of excessive red tape. Or war.


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Sat, 06/16/2012 - 10:50 | 2531995 falak pema
falak pema's picture

BP on the Oil scam and damn the consequences trail? 

Sat, 06/16/2012 - 10:51 | 2531998 fuu
fuu's picture

Incoming train wreck.

Sat, 06/16/2012 - 10:56 | 2532005 Mr. Fix
Mr. Fix's picture

A massive wave of destruction from the left.

Sat, 06/16/2012 - 11:39 | 2532122 Pinto Currency
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Paper currencies (not just the USD) are declining in value as they are being diluted together by central banks.

Real assets are increasing in price.

The 100 year battle of banks and governments against 3,000 years of market evolution that chose gold and silver as money is almost over.

Sat, 06/16/2012 - 11:40 | 2532128 Short Memories
Short Memories's picture

LOL! So just because BP profits due to scarcity we should believe them on this?

How about, if peak oil gets out of the bag then govt investment will move toward renewables!!!

poor basis for a belief

Sat, 06/16/2012 - 13:20 | 2532330 Marginal Call
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The world is swimming in oil, that's why we're pressure washing sand to get it. 

Sat, 06/16/2012 - 14:25 | 2532431 easypoints
easypoints's picture

The author states that BP has an interest in oil scarcity, but can't it also be said that larger reserve estimates are good for oil companies to use as leveraged collateral?

Stating you have X billion barrels of oil in your possession that is worth $X at the current price of oil, is much better looking on paper than say, having to spend the money to extract the tar sands or shale, refine it, and sell it at that same price.

Sat, 06/16/2012 - 14:51 | 2532466 GiantVampireSqu...
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Oil production (extraction) started at 0 and eventually it will return to zero.  Since we know where it started and where it will end up, we know there will be a peak.  A maximum extraction rate after which will come a decline.  Only a Phd would believe we can extract more oil every year.

Sat, 06/16/2012 - 15:20 | 2532523 macholatte
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But the Earth’s extractable hydrocarbons will eventually dry up, whether that’s in 500 years or 200 years.


Demand will increase as long as there's the dichotomy demanding "human rights" to population growth and the "save the planet" crowd against the politically inconvenient truth of the simple concept that increasing the standard of living for 5 billion people means consuming huge quantities of energy like never before. There needs to be a way to create economic growth without population growth before the term "sustainable" has any meaning at all. Until then it's all just academic blather.

(For all you psychos out there... I am not advocating mass murder, genocide, eugenics or any of that shit. Just stating a fact that I believe Mr. Aziz missed.)

Sat, 06/16/2012 - 17:33 | 2532693 Ookspay
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There will always be energy, God wants all six billion of us to have Ipads and stuff... ; D

Sun, 06/17/2012 - 09:39 | 2533628 Pinto Currency
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Even though Obama's Choomwagon was a Volkswagen, his adminsitration is blocking sales of the 72 mpg. Volkswagen bluemotion diesels from being sold in the US.


Sat, 06/16/2012 - 20:35 | 2532890 Element
Element's picture

Yes, but don't forget or discount efficiency. 

Buy a Prius and your fuel use will fall by around 30 to 40%.

(other hybrids not so much, maybe 20%, the Prius is still the most efficient as far as I am aware)

However, you may decide to drive further, and more often as a result, cancelling efficiency dividends.

Then again, you most probably wont.

Let's say 25% ... not bad.

Extend and pretend

(well, let's face it, only a modest fraction of humanity drives, so energy use remains high and soon going higher).

Sat, 06/16/2012 - 22:03 | 2532997 macholatte
macholatte's picture


Efficiency is an illusion and here's why..........

Make all cars 30% more effiecient. OK?

NOW increase the number of cars by 100%. OK?

Sat, 06/16/2012 - 22:27 | 2533031 Liquid Courage
Liquid Courage's picture

Thank you, Professor Jevons.

Sun, 06/17/2012 - 01:35 | 2533233 Element
Element's picture

There is nothing illusory about the efficiency gain of each vehicle.  It does help us to ease the effects and cost of increased numbers of vehicles being bought.

If those numbers are increasing in unsustainable ways (and WHERE this is happening, it will be a severe problem in some places, but not in others), and if we think the market will deliver economical alternatives for travel and transport, then the economic opportunity and incentives will emerge to make it more attractive to not use ANY car in certain places or countries.  Either way the cars that do exist and will persist to be used are certainly going to be dominated by more efficent hybrids.

The finer-points of an efficiency argument are beside the point though, it's an entirely practical situation here, I fill 'er up and the cost is way lower. 

When you experience that, you don't go back.

Sat, 06/16/2012 - 22:32 | 2533039 Pay Day Today
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"Buy a Prius and your fuel use will fall by around 30 to 40%." Don't ignore the 'embodied energy' of a Prius, the energy needed to build the Prius, all its components and component materials, in the first place.

Sun, 06/17/2012 - 01:40 | 2533224 Element
Element's picture

Fuel use still falls by around 30 to 40%.  That is the salient point and whole reason for this technology existing in the market. A product for which there is strong and growing demand as prices fall while their production is going up very sharply indeed, and is displacing sales of convention models.

A Prius's components are designed to be lighter (thinner panels, lighter materials used wherever possible) than other comparable sized cars.  And because their electric motors generate so much torque, their combustion engines can be much smaller and more reliable, uses far less materials.  Their gear boxes are also incredibly simplified, lighter, use less metal, less lube, less machining to create.

That's one of the major reasons for why the Prius is so much more fuel-efficient than merely 'converted' hybrids, that have a preceding much heavier design and conventional drive-train model, like the Camry did (and still does).

Those legacy cars are the ones primarily containing more "embodied energy".  Why single-out the Prius, when its the most efficient car to operate (and perhaps to maintain).

Is the reason because more batteries, magnets and copper are used, than in the conventional car?  But there is a trade-off that is not being 'accounted' for, in the development of this technology. Toyota just introduced a version of the Prius that can get away with using AC-mains power only, for about 20km at a time, for zero emissions at the exhaust pipe.

Drive to work, recharge at work, drive home - zero emission vehicle.  Effectively it becomes a short range electric car - AS WELL as a hybrid, if the battery runs down, or you want more power.  If you want more power with high torque and low weight, you plant the foot and instantly the petrol motor kicks-in, then shuts-down again when the battery is topped-off and you have eased off the pedal.  the pedal is just an input device telling a computer you want more acceleration.  The computer decides how the car will generate it, whether to run the engine, or not.

This is ultra efficient.  What's not to like here?

Now think of what will routinely become possible with the next generation of dedicated hybrid models.

This absolutely is the way forwards for autos and for efficiency gains. These efficiency gains are in real-world effect, not just abstract arguments.

Plus anyone looking can see the price of magnet materials and copper is being jacked up to the stratosphere into bubbles (mostly due to hoarding stockpiles).  The thing with hording large stocks of industrial metals is eventually results in huge input price collapses.  And when this does occur the most energy-efficient processes and producers with be the ones left standing, to supply the market demand at the resulting prices.

And that will greatly reduce the costs of manufacturing and replacing such hybrids, even if we ignored the growing economy of scale effects of the rapidly ramping mass production of these cars, which is already having a dramatic effect on lowering prices, even during a massive input price bubble.

Don't just look at the down-side story, because the potential upside is pretty bright for these cars.

There are trade-offs in anything we do. We need to keep them in perspective and not just look at the alleged down-side story.  I think that side of the story is more or less unbalanced and being overblown.

Sun, 06/17/2012 - 09:28 | 2533598 Pinto Currency
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Not just hybrids - but Obama has blocked the 72 mpg Volkswagen bluemotion diesels from being sold in the US.

Now think of a hybrid diesel and what can be achieved (with some tweaking).


Sun, 06/17/2012 - 10:35 | 2533730 Element
Element's picture

Guess the competition was deemed, "nofair!"?

72 mpg is a bit unamercan though.

Sun, 06/17/2012 - 16:10 | 2534642 Pinto Currency
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The last thing big gov (Barry, Romney, & co.) want is highly mobile & informed citizens without begging bowls in their hands.

Nothing worse than a cigar chomping, pissed sheep in a diesel car that can go 75 mpg.

...and never forget EPA incompetency as a factor.

Sun, 06/17/2012 - 00:40 | 2533188 Zionist Jew
Zionist Jew's picture

Peak Oil will not be an issue after we cull 80% of the goy herd.

Sun, 06/17/2012 - 01:45 | 2533252 Element
Element's picture

OMG! ... an honest joo!! ... lol

Sun, 06/17/2012 - 01:57 | 2533266 Lord Koos
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History shows the culling usually goes toward the opposite demographic, thus explaing uber-militant Israel.

Sat, 06/16/2012 - 15:22 | 2532526 AldousHuxley
AldousHuxley's picture

Does the chart include Iraqi oil Sadaam was selling in black market under Food for OIL scam?


sure, oil peaked, but there's still 70years before oil runs out.


Ford always coming out with mass production ALL electric is there, they just needed go ahead + bailout money from government to signal that.

Sat, 06/16/2012 - 15:58 | 2532571 DaveyJones
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it's that definition of "runs out" that trips people up. You don't mean to suggest that before that "point" things are cheesy

Sat, 06/16/2012 - 22:16 | 2533012 AldousHuxley
AldousHuxley's picture

my guess is that world war III will occur when world is running on empty.


Saudis are running out but Venezuela tripled their reserves in last 10 wonder chavez is marked by US as a "socialist terrorist" because he didn't want his people end up like Saudi kingdom.



Your grandkid's so called terrorist will look more like south americans than middle eastern....


Sun, 06/17/2012 - 04:10 | 2533351 UGrev
UGrev's picture

Because Chavez is just such a peachy-great guy... right?  



Sun, 06/17/2012 - 11:52 | 2533923 SubjectivObject
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I'll see your terrorist, and raise you an Administration full.

Sun, 06/17/2012 - 12:20 | 2534002 falak pema
falak pema's picture

royal chavez flush?

Sat, 06/16/2012 - 17:19 | 2532676 riley martini
riley martini's picture

 Exactly Easy they use those numbers at bonuses time too . There is a lot of oil it's just a matter of what price.

Sun, 06/17/2012 - 01:59 | 2533269 Lord Koos
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Price in dollars, and price in environmental destruction will continue to rise unless conservation & alternatives are seriously implemented.

Sun, 06/17/2012 - 10:54 | 2533794 flattrader
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The author wrote:

>>>So no. I’m not lying awake at night worrying about imminent peak oil. There’s plenty of extractable oil,<<<

Margin Call wrote:

>>>The world is swimming in oil, that's why we're pressure washing sand to get it.<<<

Yeah, no "f"ing joke.

Flattrader writes:

>>>I lay awake in bed at night and worry about imminent peak stupidity.<<<

Sat, 06/16/2012 - 13:37 | 2532355 markmotive
markmotive's picture

There's a big difference between Saudi oil and Canadian oil sands. It's not a 1:1 comparison.

We have exploited the easy to get oil:

Sat, 06/16/2012 - 15:35 | 2532547 AldousHuxley
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China can manipulate the foreign policy of the United States in the same way the United States forced the United Kingdom to withdraw its forces back during the Suez crisis.

This was in 1956 when the UK, France and Israel invaded Egypt to take control over the Suez Canal. Washington threatened to dump the US Government's Sterling Bond holdings if Great Britain didn’t withdraw troops and the invasion ended.

Sun, 06/17/2012 - 11:17 | 2533849 falak pema
falak pema's picture

That decision initiated the decline of UK in world politics, and also cornered colonial France to just Algeria!


It resulted in the political demise of Antony Eden, and his successor Macmillon talked about "the winds of change". And "we've never had it so good". 

On that second account he was proven, ironically, very wrong. As from 1959 onwards the UK economy went into a 20 year tail spin! 

Guy Mollet the other culprit got mired down in Algeria and shameful military terrorism and torture, like USA in IRak. It broke the IV Republic and France thankfully got De Gaulle back who cleaned out that Augean stable but gave France an absolutist and statist constitution that his successors have used and abused to the bone; aka Sarkozy recently; whereas his tenure kept government lean and mean and initiated 15 years of economic growth and nuclear independence.

Lastly, the ensuing 1956 and 1967 wars made Israel uber-alles militarily in Mid -East, resulting in ousting Nasser and making Eygpt firm US surrogate, thanks to Sadat and Kissinger shuttle diplomacy. Pax Americana was Seven Sistered into place and the USD Oil hegemony solidified, making Saudi the new Montezuman golden vaults. 

Awesome play by USA in 1956 to claim the ME away from the last remnants of the British Raj. But it also let the USSR into the henpen with the Aswan dam...starting the Palestinian resistance militarisation, with Al Fateh.

Sat, 06/16/2012 - 11:53 | 2532168 AlaricBalth
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Great quote from "The Formula".

: [Barney Caine to Adam Stieffel, Chairman, Titan Oil] What do you know about this nation? Don't you ever give a second thought to American citizens? You're the reason their money's worthless. You're the reason old people are eating out of garbage cans, and kids get killed in bullshit wars. You're not in the oil business; you're in the oil SHORTAGE business! You're an ivory-tower hoodlum-a common street killer. I wish to Christ there was some way I could nail ya. "

Sat, 06/16/2012 - 12:13 | 2532210 Sophist Economicus
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Shouldn't Barney Caine have given that speech to Nancy Pelosi?   Oh wait, could it be that doing so goes against the Hollywood/Stalanist paradigm of pointing 'the poor' at the 'feel good' enemy while the ruling class gets more powerful....Nahhhhh


Sat, 06/16/2012 - 13:56 | 2532393 LetThemEatRand
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What those of your ideology routinely miss is that he could have given the speech to both of them.  It's not one or the other.

Sat, 06/16/2012 - 17:01 | 2532660 LawsofPhysics
LawsofPhysics's picture

What everyone fails to realize is that it is not about reserves.  Reserves don't mean shit.  What is important is the cost and the flow rate or FLUX of oil.  And by cost I mean in energetic terms.  Look at the charts, cost is increasing.  If the whole process becomes unprofitable from an energetic standpoint it won't matter one fucking bit.  Print all the pretty paper you want, we will stop using oil with millions of barrels in the ground.

Sat, 06/16/2012 - 22:35 | 2533043 Pay Day Today
Pay Day Today's picture

Exactly. Finding 4 billion barrels of oil is much less impressive when you factor in that one billion barrels worth of energy might be needed to extract and refine it.

Sun, 06/17/2012 - 06:23 | 2533432 RECISION
RECISION's picture

Or more to the point - an EROEI of five may return you five x the energy invested to extract it, but if your whole economy has been build around an EROEI of x twenty - that means that 1/5 of your economic activity that you used to enjoy has just vanished.

Sun, 06/17/2012 - 09:47 | 2533645 DaveyJones
DaveyJones's picture

not just your economy but many of your economic theories

Sun, 06/17/2012 - 05:37 | 2533389 WezTheJuic
WezTheJuic's picture


Self imposed increase which justifies the imposed increase in pricing.  Energetic Terms.



Last time I checked, there ARE at least FIVE super holes on this planet. These are holes with so much oil and pressure, that each hole has enough for 200+ plus years of global demand.  It is everywhere, and, it is ABIOTIC.  What do you think the Gulf of Mexico fiasco was about?  Was it not also about a response to Russia discovering their first super-hole?

After all, the people who control energy and production of energy can say anything.  Take a look at the mass purchasing of power producing companies back in the nineties, and then ask, "Which/Who's money was used?"  Follow the money.


Still, well stated comment.




Sat, 06/16/2012 - 11:17 | 2532008 falak pema
falak pema's picture

Read this : the last time the oil majors tried to pull the wool over the people's eyes it cost Shell's top man his job in 2004. They never get tired of lying in their own interests....a shortfall of 20-25% in Shell's proven reserves! 

Philip B. Watts 1945— Biography - Warned of global warning, Exploration director for shell u.k

This is a corker ! : Priced in gold, oil is still very cheap — almost as cheap as it has ever been! Wow, does this guy understand what the US policy in ME is all about?

The whole purpose of US oil dependency on foreign ME oil since 1973 was for it to be a USD monopoly thus ensuring thats its price in "funny money" would devalue with the reserve currency. As this is the MAIN plank of Pax Americana of post-1971 monetary and energy policy; any change in this would change the geopolitical game in energy. No way that US on its own initiative will go back to gold vs oil pricing formula; no way, unless its forced onto them and this inspite of wars! They would lose that VITAL lock-in of USD hegemony, if the world premier fossil fuel reserve of cheap (in cost terms)  liquid reserves were to be denominated in other currencies. Pricing of course is another issue controlled by the cartel! 

Sat, 06/16/2012 - 11:30 | 2532087 Woodyg
Woodyg's picture

Never mentioned in any of these articles is that the USA is the third largest producer of oil in the world....

Behind only Russia and Saudi Arabia -

We produce nearly 8 million barrels a day....

And the largest user of oil in the world is the us military......

Bring the troops home and end the worldwide occupation is my suggestion.

Sat, 06/16/2012 - 22:39 | 2533047 Cathartes Aura
Cathartes Aura's picture

great posts, both falak & Woodyg's reply - the story is always more detailed than they let on, as simple memes pacify simple minds. . .

I like the word you chose,  "occupation" - used to mean one's "job" and also describes what the military does to other sovereign nationstates labeled "foreign". . . let's not be too pre-occupied with ideas foreign to our own integrity, as this year continues to unfold.

integrity : the quality or state of being complete or undivided : completeness

Sat, 06/16/2012 - 11:44 | 2532138 MajorWoody
MajorWoody's picture

You see people, a post like falak's cannot be upvoted enough.  Yes it is difficult to understand at first, but give it a try.

Sat, 06/16/2012 - 12:02 | 2532186 jimijon
jimijon's picture

Brilliant Strategy Really.

Send them digits or paper and we get their Oil and force everyone else to take our digits and paper.

AND, we get to keep our reserves in the meantime with just enough free market access to keep the free market boys salivating.

HOWEVER, this great success could not be handled. This power was too great and corrupting. It also fed right into the banksters hands and their exponential function.

Meanwhile ... How much is a 1964 Quarter in Gasoline these days?


Sat, 06/16/2012 - 14:28 | 2532383 greyghost
greyghost's picture much is a 1964 quarter in gasoline these days? exactly...and how much is a barrel of oil today in gold and what was a barrel of oil in 1964? this is the point and the only point. have read almost every comment on this thread....just love the ones where the poster uses a math trail no one else can follow to make their point...useless mind masturbation. HOW MANY GALLONS OF GAS COULD YOU BUY WITH A 1964 QUARTER? THE SAME QUARTER TODAY WILL BUY HOW MANY GALLONS OF GAS TODAY?

the author of the article is correct...oil is as cheap today as it has ever been. the only thing that has changed is the fucking value of the dollar you over educated nin com poops!!!!!!! yet we get endless stats about cost of shit in cost of shit out equals running out of oil...into the high price of oil in dollars is a sure sign of peak a sure sign the world is coming to an end like the mighty quinn said last week.....go to his blog and check out all the end of the world food containers you can buy...6 months supply for $xxxxx. makes what he says suspect...yes?

Sat, 06/16/2012 - 15:13 | 2532502 Jim Quinn
Jim Quinn's picture

Blow me douchebag.

Come over to my blog and I'll kick you in the balls so hard they'll come out your mouth.


Sat, 06/16/2012 - 16:10 | 2532590 greyghost
greyghost's picture

"BLOW ME DOUCHEBAG"...that is your answer? zero hedge takes your posts serious enough to give you space here? and you act like a 6 year old on the play ground!!!! enough said "come over to my blog and i'll kick you in the balls so hard they'll come out your mouth". REALLY.....that is what you bring to the table. i simply stated the other day that all you say is same old tired nonsense since the seventies. yet we are producing more and more oil...when does your story change? from the looks of your blog, it is all about survival in the mountains when the world comes to an end...which is the same old story since the seventies also. reminds me of the book "the late great planet earth" or something along those lines. god...what a piece of crap writing that turned into.

Sat, 06/16/2012 - 16:56 | 2532605 Jim Quinn
Jim Quinn's picture

"Simply stated" is correct. You are a simpleton spewing out your ideological storyline. Don't try to mislead the good readers of ZH that my site is some kind of survivalist website. Your ability to misinform and mislead makes me believe you are either a complete dumbass or are being paid to make bullshit posts.

My articles are backed up with facts. I get paid by no one to write my articles. I do it to reveal fools and knaves like yourself.

So keep spewing your storyline, but the smart ZH readers realize you are a fool. This article was as pathetic and vapid as one of your posts.  

Sat, 06/16/2012 - 21:18 | 2532946 malek
malek's picture

Now you're acting completely stupid.

It is a fact: if you believe the dollar is being massively devalued, then you cannot at the same time post that the real oil price has been skyrocketing.
I have pointed that out several times but so far these logical fallacies keep being repeated, and no one ever gave me a concise rebuttal.

Sat, 06/16/2012 - 21:47 | 2532981 Jim Quinn
Jim Quinn's picture

Are you having a brain seizure?

Are you ideologues so lost in your own worlds that you actually read things that aren't even being discussed?

Supply and demand appears to be a concept beyond the comprehension of a vast swath of ideologically driven people with an agenda to push.


Sat, 06/16/2012 - 21:54 | 2532987 malek
malek's picture

What does supply and demand have to do with devaluing the dollar???

I take that as you're avoiding discussion. Good luck to your beliefs, and enjoy your argumentum ad hominem.

Sat, 06/16/2012 - 22:12 | 2533006 greyghost
greyghost's picture

welcome aboard the insult train malek. this writer can only answer with insults and by degrading posters. he challenged me to google eroei and all i find is that it is a theory and has many detractors...probably why quin has such a thin skin. i am having great fun egging him on. and he keeps answering with dealing with a nasty child.

Sun, 06/17/2012 - 03:32 | 2533331 AnAnonymous
AnAnonymous's picture

this writer can only answer with insults and by degrading posters.


He is a US citizen. This is what US citizen do.

Sun, 06/17/2012 - 09:42 | 2533633 BeetleBailey
BeetleBailey's picture

Not all "US citizenS" insult and degrade.

Stop generalizing.

Sun, 06/17/2012 - 10:50 | 2533783 Inspector Bird
Inspector Bird's picture

With all due respect, Aziz points out that oil WILL run out someday, and that most of the extractable oil isn't easily extractable.

But shale oil is a good example of why peak oil is a wrong-headed concept, as Julian Simon once pointed out.  Shale oil was, at one point, too expensive to extract vis-a-vis the value received at market.  Yet this is no longer true.  This is what a good market economy does - it shifts prices while innovation alters costs to make new markets viable.  As a result, peak oil is a long way off.  Very very far off.  And even if it isn't, alternatives are almost close enough to be viable, should we need to move quickly (which we don't).

As an average consumer, I've kept an eye on alternatives.  I'd love to have a solar panel or wind generator on my property.  These are options which are not viable to the average consumer today.  The costs exceed the expenses EVEN WITH tax breaks.  I know, because I investigate it each year.  If I'm willing to put up a huge capital outlay (which I am unable to do) and wait 15-25 years for payback (which I will not do), then yes, these are viable options.  But only the Ed Begleys of the world are either wealthy enough or silly enough to do it. 

I don't have this flexibility.  Nor do 90% of the US.  This is hard economic fact which many people ignore.

Facts remain - hydrocarbons are still viable, so it makes sense to continue to rely on them.

As for supply and demand, it is very clear to me that the cost of gasoline at the station is only partially set by supply and demand.  Why?  Because as a % of dollar spent, gasoline and oil products have fallen since 1980.  Our conservation efforts have been very effective.  On the other hand, the rest of the world is using more oil, which has driven up the cost of oil.  Yet even on this basis, the main reason for the rest of the world making things more expensive is driven cash.  Shove a pile of money into the hands of poor people and let them spend, and they may buy cars, or purchase products produced by hydrocarbons, etc. 

How does US printing impact China or India spending more?

Easy.  The US borrows against its future, this is funded by these nations, which makes them wealthier, and allows them to spend now due to the wealth effect.  We grow with debt, they grow with wealth.  This is enabled, on both sides, by keeping US interest rates low, and this is accomplished by printing money.  It's the Mississippi Bubble writ large.  Not hard to figure out, not crazy, not a brain seizure. 

The interesting thing isn't what's causing it - but where those nations will head.  In my estimation, China's doing it all wrong and will wind up broke in the end.  India I'm still not sure about, but they don't seem to be as profligate as China and may represent the true future economic power of the world.

I don't believe in peak oil, any more than I should have believed in 'peak horses'  or 'peak blacksmiths' in 1860.  It's a meaningless concept which the marketplace deals with effectively.

Sun, 06/17/2012 - 11:44 | 2533911 greyghost
greyghost's picture

bravo...well said inspector

Sun, 06/17/2012 - 13:04 | 2534168 malek
malek's picture

+1 oz. for Julian Simon reference!!!

Sun, 06/17/2012 - 01:43 | 2533247 Dr. Sandi
Dr. Sandi's picture

You guys do realize that this isn't Jim Quinn the "Burning Platform" guy, don't you?

The real Jim Quinn has pretty decent spelling and grammar skills, unlike the current Jim Quinn.

But have at it. Kind of like beating on a virtual straw man. Whack away!!!

I'm going to come back as Hillary Clinton and lay down some real evil shit here.



Sun, 06/17/2012 - 01:53 | 2533260 greyghost
greyghost's picture

if so, the real jim quinn should step forward. i even have an invite to the platform to have my balls but seriously the real quinn needs to up. everyone now sees quinn as a complete and utter ass.

Sun, 06/17/2012 - 13:09 | 2534184 malek
malek's picture

Not sure, but it makes no difference.

When I post something I'm arguing about the facts, not the writer.

Sat, 06/16/2012 - 16:29 | 2532612 Jim Quinn
Jim Quinn's picture

You're brilliant analysis of "we are producing more and more oil" is on par for a clueless ideologue trying to convince idiots of his false storyline.

Your attempt to classify my libertarian website as a survivalist end of the world website is hysterical. I believe last week I was a tool for the oil companies. Which is it grey dimwit? Your comprehension abilities are on par with 3rd grader.

I take shits with more substance than the drivel I've seen you post on ZH.

Come on over to The Burning Platform and test out your debating skills, you dickless wonder.

Sat, 06/16/2012 - 19:53 | 2532834 greyghost
greyghost's picture

hey jimmy....what is that TBP STORE OF DOOM all about...end of the world? the simple question of the day is.....are they drilling and using more oil today...than in 1970. the answer is either yes or no. is the story you tell the same as the college professors taught in 1970. do you remember earth day? the good dr. who wrote the end of the world book because we were running out of "everything". not only oil but food and water and air and the earth will freeze us to death in "global cooling". i submit that we are growing more food and pumping more oil and pumping more natural gas than ever before. no i will not go to your website since that is how websites get advertisers. no just not interested in end of the world doom [that is from your website] gloom and there is no hope crap. i prefer to see new oil/gas fields discovered and new improvements to the solar field like the mit research where they increased output something like 60% or the texas univ. that increased improvement by 40%. no i believe man will work thru the current mess and theft on a global scale. i bought into the endless end of the world crap from talking heads  for thirty years all the while being distracted as my country was stolen from its citizens. but don't worry, the end of the earth is at hand. yep...they thunk that during the black plague and WWI AND WWII and the civil war and the crusades. i do hope you make millions on your "doom store" and seeds and end of world food stuffs...good luck.

Sat, 06/16/2012 - 20:11 | 2532857 Jim Quinn
Jim Quinn's picture

The store of doom is a joke you ancient douchebag. I wouldn't expect someone who is stuck back in the 1960s to actually be able to think critically. You remind me of an ignorant grandpa who thinks they have all the answers, based on anecdotes and what their dumbass teacher taught them in 8th grade 5 decades ago.

Facts don't matter to ideologues like yourself. A storyline will do. You are a classic old crank with your declarations about earth day. No one knows what the fuck you are talking about old man. I deal with reality. You don't even know what peak oil means.

You should join your butt brother Zero Gov't in the willfully ignorant wing of your local old folks home. You old cranky farts provide a humorous aside here on ZH. I'm really surprised you were able to pass the math exam to get posting access.

That's a feather in your dunce cap.

Happy earth day.  

Sat, 06/16/2012 - 20:21 | 2532879 greyghost
greyghost's picture

you still refuse to address the question at hand. IS MORE OIL AND NATURAL GAS BEING PUMPED AND CONSUMED TODAY THAN EVER BEFORE IN THE HISTORY OF OIL AND NATURAL GAS? yet you have a constant drumbeat of child like name calling. however, why call your store "doom"? that is your choice of words. how about enlightment or understanding or learning or any of a thousand positive words. chose "DOOM" .....interesting. you message is one of no hope. jimmy...what is the question at hand?

Sat, 06/16/2012 - 20:31 | 2532894 Jim Quinn
Jim Quinn's picture

My hope is that truly ignorant trolls die off in the near future. My hope is that I can enlighten enough people to see the truth, so they don't get misled by ideologues like yourself.

Why don't you regale us with stories of the centuries of shale oil at our disposal. I love that one. Let me guess. Larry Kudlow is your hero. drill drill drill - hope hope hope.

It is a shame that old farts with no facts think they can sway the ignorant if they just proclaim their lies loud enough. I would provide facts like I've done in every article I've written regarding our energy situation but they would go over your head. Your 3rd grade level grasp on the situation is beyond hope.  

Debating trolls like yourself is like kicking a retarded shit eating monkey.

Happy earth day hopey dopey.

Sat, 06/16/2012 - 20:01 | 2532850 Augustus
Augustus's picture

Jim Quinn,

You are the most highly regarded evaluator of shit who posts on the Zero Hedge web site.  You should advertise your expertise with a large banner add at your own blog.  I have no quarrel with your claim to magnificent talent as one with a great eye for shit.

Sat, 06/16/2012 - 20:10 | 2532865 Jim Quinn
Jim Quinn's picture


Thanks. I can smell morons, trolls and the truly ignorant from a mile away. I actually smell something now. It is wafting directly from the post above.

Sat, 06/16/2012 - 20:28 | 2532885 greyghost
greyghost's picture

there you are jimmy...what is the question of the day? ARE WE PUMPING AND USING MORE OIL AND NATURAL GAS THAN EVER BEFORE? hell, china is even stockpiling the oil know...just in case of war. you really are a piece of your bad mouthing other posters......good lord! i do hope the tylers are watching your performance here today.

Sat, 06/16/2012 - 20:46 | 2532905 Jim Quinn
Jim Quinn's picture

Grey beard

Am I getting under your ancient mottled skin? You seem a tad irritable. Every pathetic post you make reveals your complete ignorance regarding even the definition of peak oil.

Let me guess. You don't even know what EROEI stand for. Google it old man. Try to learn instead of spewing rhetoric. Do you understand the implications of this concept. Make me proud and explain the concept to me. This should be fun. 

Pumping more oil is great. We are pumping 74 mbd of conventional oil. They same level as 2005. Got it old man? Or will you show your willfull ignorance and contest that fact. Peak oil is simply the point at which we consume more than we produce. Got it old man? If you are able to pump out another 2 or 3 mbd at much higher production costs and consumption outpaces that 2 or 3 mbd increase, you've got yourself a peak oil situation grey man.

I know this is too much for your 3rd grade level brain, so I hope this doesn't give you a stroke. Try thinking old man. It doesn't hurt.

I think it is hysterical that you think Tyler actually gives a shit about your worthless comments. Are you going to put a complaint in the ZH complaint box? You douchebags crack me up.


Sat, 06/16/2012 - 21:53 | 2532984 greyghost
greyghost's picture

i will continue to use the basic business method of operation. i will not spend 1 million dollars to extract 1/2 million dollars of oil. eroei is not the end all to the energy questions. it is a theory that has it's detractors...yes. just on wikipedia it states that the costs could be caculated down the rabbit hole endlessly. this "theory" appears like it could be made to support any position depending how far down the rabbit hole you go...what the writer chooses to include or not include will give so many variables as to be suspect. with your defense of such a thin theory i wonder if your are the author of such a theory? again i will stick to the basic laws of business...i.e. i won't be in business very long spending more than i get out. that being the case....are you saying that business is losing money drilling for oil/gas? if so how long have they gone breaking the laws of business and how long can they continue? it appears that the basic problem of "theory" again comes up against real life business. reminds of the univ. of calif. at riverside being sued by their business grads. seems the univ. had an excellant business school, only to have a new dean of busines move in. guessed it...his methods dealt with the "theory of business"...not practical business. seem the grads weren't being hired by the biggest and best....most had no job offers at all...ouch.

Sat, 06/16/2012 - 22:28 | 2533027 Jim Quinn
Jim Quinn's picture


I came up with the "theory" of EROEI???

That is a classic. You love to refer to things you don't understand as theories. 

I find it fascinating that someone who speaks so authoritatively about energy matters had never even heard of Energy Returned on Energy Invested. That reveals much regarding your opinions. You see, everything I've ever seen you post is nothing but your opinion. You attempt to discredit facts by calling them theories. You attempt to discredit my website by spewing misinformation based on a two minute perusal of my site. This is a common tactic used by ideologues who don't have facts to back up their opinions.

I'll explain the facts about EROEI. It is not a theory. It's so simple even you should grasp it, unless you refuse to.

If it requires more than one barrel of oil to be expended in order to obtain a barrel of oil, then it isn't economically feasible to do so. The billions of barrels of oil trapped in shale and miles beneath the ocean are only viable if it takes less than a barrel to obtain a barrel.

Your dreams of solar and wind are fantasies. Ethanol already requires more energy to create than it provides.

The confluence of supply, demand, price and accessibility are what create the dynamics of peak oil. You should learn the definitions of the basic concepts regarding energy before spewing your storylines. Do yourself a favor. Learn something. 


Sat, 06/16/2012 - 23:25 | 2533113 greyghost
greyghost's picture

"my" dreams of solar and wind???? really...because i post alittle about strides they have made in last serveral month with solar, makes me a believer in solar or wind?? so jimmy is that you over at the univ. of penn. wharton school of business and theory???? if that is you don't you think people would like to know that your an academic/theory type of person. wikipedia says it is a theory and can be used to say and justify any proposal depending on what figures you use or don't use. the problem you have jimmy is that with all the nonsense in the academic fields there is a trust problem. far far too many people blowing their own horns. you have authors stealing other peoples work, the clowns with the global warming hoax, the students at the univ. of calif. at riverside losing with the "theory of business" on and on everyday day in and day out. you send me off to see the eroei and i come back with...well...not everyone is on board with this theory. and what you don't like it...who cares?

Sun, 06/17/2012 - 09:08 | 2533563 Jim Quinn
Jim Quinn's picture

Your starting to repeat yourself old man. I provided a few facts for you, but your storyline is more comforting. Thinking is hard. Math is hard. I know.

Your type is so predictable. When you are losing a debate you scramble to dig up some dirt on your opponent. Now you think I'm an academic. Wrong again old man. Your research skills are on par with your IQ.

Here's a few more facts for you old man. A barrel of oil was $23 in 2002 before your oil boy Georgie Bush decided to attack sovereign countries in the Middle East. Today it is $84. I know math is hard for you, so I'll calculate the increase for you. That is a 365% increase in 10 years. Over this exact same time frame the CPI is up 28%.

If your contention that we are producing more oil than we actually need and there is an unlimited supply right under our feet, how do you explain an increase in oil prices 13 times greater than general inflation?

I await your wisdom. So far your wisdom has consisted of accusing me of being paid by the oil companies, running a survivalist website, and being a college academic. I can't wait to hear what I am next.

It is pathetic and sad that there so many people like yourself who choose ignorance over critical thinking. Maybe you should google "critical thinking". I bet you conclude it is a theory. 

Happy Ignorance Day

Sun, 06/17/2012 - 11:33 | 2533885 greyghost
greyghost's picture

ooohhhhh answered your own question. geo bush+middle east+war=higher oil prices. and yet priced in gold or silver shows an increase of dollars not a decrease of product. there are more cars, more food, more oil available today than ever before. eroei theory goes against all business logic, it claims that companies are spending more in energy than getting out...THEY SIMPLY CANNOT STAY IN BUSINESS VERY LONG DOING THAT....yet they continue to this day to seek and find and drill more and more energy....everyday. can this go on for ever...i doubt it.....will man invent better technology along the the world coming to an end by means of the eroei theory...far from it.

Sun, 06/17/2012 - 11:54 | 2533926 greyghost
greyghost's picture

jimmy i have to go now. the greek elections are in play. i am hoping the golden nazi party garners enough votes to allow them to be seated in parliment. after watching the news feed from europe last night talking about golden dawn getting 7% of the vote. after ten minutes of fear mongering they finally state that 7% is not enough to be seated in parliment. should they get seated it will be worth the price of admission to watch these clowns go ape shit over such an event. will the talking heads go as ape shit if the communists win????

Sun, 06/17/2012 - 12:20 | 2534003 Jim Quinn
Jim Quinn's picture

I have to answer my own questions because the dimwit I'm debating is incapable of answering my questions. Bush + war + middle east shouldn't matter if we have such vast supplies of easily accessible oil. The increase in dollars should have impacted everything, but CPI is up only 28%. Oil is up 365%. If the supply of oil is not a problem than it should have gone up consistent with how money printing impacted everything else. Cars and steel and food did not go up 365%. They tracked general inflation. I look forward to you ignoring the facts again as you flail about in a frenzy of accusations and theory.

I know you prefer to twist your arguments and flail about attempting to obfuscate and confuse the issue, but I prefer the facts. You really should have paid attention in Econ 101. You might understand the dynamics of supply and demand.

It is really quite humorous to see you blather about EROEI since you acquired your vast google knowledge earlier this morning. I guess a little knowledge in the hands of a dimwit is dangerous.

Thanks for playing.


Sat, 06/16/2012 - 21:28 | 2532958 Jim Quinn
Jim Quinn's picture

Grey man

I'm waiting. You wanted to have a debate about the facts. Where'd you go?

Are fact based debates not your cup of tea?

I thought so. Storylines are a lot easier.

Are you studying up on EROEI?

Sun, 06/17/2012 - 01:45 | 2533251 Dr. Sandi
Dr. Sandi's picture

Jimmy, this is your mom. Time to get to bed and stop playing on the Internet now.

If you're good, tomorrow I'll let you pretend to be an undercover policeman again.

Sun, 06/17/2012 - 08:54 | 2533541 clymer
clymer's picture

Jim and Grey, if you two could upload a small graphic to attach to your moniker (grey, you could use this:

and Jim, you could use this: ),

it would provide the readers a faster reference to your posts. This banter is fascinating :)

Sun, 06/17/2012 - 09:14 | 2533572 Jim Quinn
Jim Quinn's picture

Calling Dr Moe, calling Dr Curly, calling Dr Larry, calling Dr Sandi

Toying with anonymous internet trolls is amusing.

Observing the vapid comments and insane beliefs of Gray Ghost, Zero Gov't, David Pierre and a host of other ZH trolls convinces me that this country is truly fucked.

Do you have a perscription Doc?

Sat, 06/16/2012 - 20:05 | 2532859 Umh
Umh's picture

What's wrong with this blog?

Sun, 06/17/2012 - 01:10 | 2533221 LowProfile
LowProfile's picture

He uses ad hominem attacks on anyone who disagrees with him, regardless of the merit.

Sat, 06/16/2012 - 21:15 | 2532937 True.North
True.North's picture

Absolutely correct.

Sending fiat in return for hard assets - they call it 'long funding' @ Goldman (once they've gone short the appropriate parties).

Sat, 06/16/2012 - 15:10 | 2532458 greyghost
greyghost's picture

falak...what does this have to do with peak oil? your talking about the dollar policy where "everything" of value is priced in dollars. under your post we should have peak copper,wheat,corn or iron? because the u.s. mantains this policy we have "peak oil". is it not to just maintain the u.s. dollar since oil is the largest commodity? has nothing to do with quantity. as always stated here on zero hedge price is the great equalizer...and the "price" in "gold" and "silver" says no shortage, just over printing of u.s. dollars. creating the need to police the middle east....yes. another mind numbing exercise is the "china" peak oil story...since china is stockpiling oil we "must" have peak oil. hmmmm.....maybe they are just doing what the germans did just before WWII......STOCKPILE....for war???? oh no not war....must be peak oil.....just has to be.....doesn't it??????

Sat, 06/16/2012 - 16:41 | 2532607 falak pema
falak pema's picture

you don't seem to understand priorities :

The US took the easy way out: control the biggest oil patch and link it to their weak link after 1971 BW revoke to reinforce THAT link, USD fiat hegemony. By doing this they condemned the western world to live under a FAKE fiat umbrella that devalued the reserve currency, and consequently, as seen in the 1970s inflation spiral, their own wealth. It ruined the first world paradigm of welfare state and middle class wealth. It destroyed it instead of encouraging the US to seek an alternative energy and monetary route. As encouraged by the Shah and Peanut CArter's synfuels program. Game changer then that would have ensured first world's energy independence. So they chose then to outsource world production, thus further gutting the first world labour market; final dagger into the heart of the democratic and middle class construct. They chose SERFDOM for the 99% and freedom for the 1%; THEN, in 1980.

What has it to so with Peak oil? Peak oil is about OPPORTUNITY COST for replacement of the one golden resource that has fed the growth of industrial world since 1973 : ME oil monopoly. We needed an alternative energy or geographic fossil reservoir in first world, aka US coal syn fuels. We didn't put our backs to it. We CHICKENED OUT, we lost that opportunity cost of alternative energy AS OF 1981! That's the strategic price we paid! Now its that much more difficult as WE KNOWINGLY PUT, IN HUBRISTIC CERTITUDE, ALL OUR EGGS IN ONE ME BASKET, those of these wahhabist shills, who share not our values and who make our leaders into DIRE FEUDALISTS. We are in oligarchy regression, we even begin to think like them; the unkindest cut of them all! The ultimate betrayal of enlightenment. Lost opportunites to build a new paradigm, lost values, lost faith in ourselves. What was your question?

Why is PEAK OIL important? It isn't per se, in a unified political world, which doesn't exist today, it wouldn't be a big deal. But its political and mind set consequences are debilitating in a divided, hostile you understand THAT crisis of civilization? Deeper than whether we burn oil or sun or gas. We've lost our compass, our sense of values! (Apart from the ecological conundrum which I believe in but not most on Zh, so I won't dabble in that aspect of the planet's evolution).

We the people have lost our future! To those who are not on the same page as us. Not that they are worse, they are different and we must regress. As they call the tune and we pay the bills in the future, like people without a sense of what excellence means! 

Sat, 06/16/2012 - 18:30 | 2532740 DaveyJones
DaveyJones's picture

dead on


Sat, 06/16/2012 - 18:48 | 2532751 BigDuke6
BigDuke6's picture

FP you are the Rushdie of ZH.

Dreamy scribbles of dire subjects.

Sun, 06/17/2012 - 04:30 | 2533359 falak pema
falak pema's picture

dreamy, lol, I'll buy that but not about oil. I worked in this industry for twenty years and I stand by what i say in terms of fact and consequence. Its a malignant cartel, its an extractive empire. Its not a dream, its a nightmare. Ask the Nigerians and the Gabonese and the Congolese; we raped them economically for forty years of their share of wealth. And we have built the ME monster just like in the old Crusader days. Its our NEW Jerusalem, hubristic colonisation of immeasurable consequence, the oil patch.

No dreams there, just stark reality; maybe the scribbles...

Sat, 06/16/2012 - 20:03 | 2532853 greyghost
greyghost's picture

you're bringing up jimmy carter? that says everything. probably the worst president in american maybe the current one. lol carter...the one who said we would stop building the stealth bomber...which works great mr. carter. or did you mean the president that gave away the panama canal so china could move in and lock up both ends of the canal....did you mean that carter. not the baby clothes carter?

Sun, 06/17/2012 - 05:15 | 2533363 falak pema
falak pema's picture

I meant Synfuels initiative killed by RR in 1981-82. RR told Saudis in 1982, (King Fahd, newly installed pro-american, rabid muslim king, who was all in on the Saddam Iran caper then and needed US support locally), to open the tap big time and forget peak oil in their OWN back yard. As far as RR was concerned that was US property anyway. And we have built our world since on that flawed assumption. If you know anything about the history of your own country and the wrong turn we took there from the energy paradigm perspective, you would not be so smug in bad-mouthing this President, who at least made ONE right decision. Lets face it, he was in august company by those who preceded or succeeded him; in the light of events as they have transpired : RN, GF, RR!


Sat, 06/16/2012 - 21:50 | 2532970 malek
malek's picture

You got the big picture right, but are exaggerating some points to support your wrong conclusion.

The US has already imported lots of ME oil before Nixon broke the gold link and allowed us to pay for oil purely in funny money. So that action strengthened that approach - and maybe tricky Dick was fully aware of it. And on the other side the Oil Embargo shortly thereafter might also have been caused by some ME leaders becoming aware of it.

But if that symbioses ends -for what ever reason-, it means the US must go back to producing things to be able to pay for oil with real stuff (or indirectly with gold).
And as that also depends on demand in the oil exporting countries, that would make Canadian oil much more competitive to the ME, for example.
Or the US could push to produce more oil themselves.
And surely the drive to reduce energy consumption would get a big push.

We wasted time, yes, but there will be no crisis of civilization because of peak cheap oil.
Other developed countries demonstrate the US could comfortably live with half the energy it uses, and that's after already counting in the bigger size of the country (transportation needs) and the fact that more than half the country needs air conditioning during summer.

Sun, 06/17/2012 - 04:38 | 2533364 falak pema
falak pema's picture


We will resolve this crisis of civilization when we decide to come OUT of BOTH these strangleholds. Pax Americana's future is written in the resolution of this conundrum IMO.

Sun, 06/17/2012 - 10:03 | 2533663 DaveyJones
DaveyJones's picture

Poetic that both White House Dicks supplied profound chapters in the Petro Dollar tragedy. When Cheney said "the American way of life is non negotaible" he meant more than one perspective. Criminals often construct their own necessity defense in their twisted murderous minds. 

Sun, 06/17/2012 - 13:25 | 2534216 malek
malek's picture

The crisis we have was not caused by using oil.

It has everything to do with dumping lots of money on select people, which (at least subconciously) know they didn't deserve it in such large amounts. If you can keep up with that long enough (no problem with fiat and control over a pool of shit everybody wants: oil), you undermine the foundations of society, some call it morality, in a VERY effective way.

(No, I'm not saying every rich person is undeserving of his/her wealth.)


Sat, 06/16/2012 - 23:00 | 2533079 Cathartes Aura
Cathartes Aura's picture

ahhh falak, you're putting deep thoughts to posts,

We are in oligarchy regression, we even begin to think like them; the unkindest cut of them all! The ultimate betrayal of enlightenment. Lost opportunites to build a new paradigm, lost values, lost faith in ourselves.

these things are rarely mentioned here, but underpin civil-izations. . . there are many things lost of late, but lost values, and lost faith in ourselves & each other, this is the stuff of regrets.

they are different and we must regress

evidence all around us.

Sat, 06/16/2012 - 11:31 | 2532096 YuropeanImbecille
YuropeanImbecille's picture

The important part here is the "cheap oil" part, if you only have a EROEI of 1:5 then the markets can not continue to grow as we have seen to date.

So it has nothing to do with how much oil there is, the question is at what price? A 1:5 ratio will not allow for a globalization with infinite growth.


Will we fix this issue? Absolutley, but there will be a transition period that will be a bit troublesome.

Sat, 06/16/2012 - 11:41 | 2532131 CPL
CPL's picture

What are they going to do?  Burn the Yen to power their homes?

Sat, 06/16/2012 - 12:24 | 2532230 EscapeKey
EscapeKey's picture

Thanks for those. Very interesting about Petrobras' higher cost and lower yields, and this:

To put this into perspective, it now costs between $80and $100 a barrel to break even on new Canadian oil sand mines where the sands are dug up with giant mechanical digging trucks that have hydraulic and electrically-powered shovels and transported to an extraction plant in 320 tonne trucks. The bitumen is extracted from the sand, water and clay by blasting it with hot water and separating it from the resulting slurry. Less than five years ago, the figure was just $30 a barrel.

For deeper reserves, the so-called steam-assisted gravity drainage drilling method – which injects steam underground and pumps the bitumen to the surface – costs about $60 a barrel.

Sat, 06/16/2012 - 23:03 | 2533086 Cathartes Aura
Cathartes Aura's picture

water.    blue gold.

Sat, 06/16/2012 - 11:46 | 2532147 Republi-Ken
Republi-Ken's picture

ASSIZ I see you AGREE WITH OBAMA 100% in his national energy strategy ... 'all of the above' ... and be willing to lose $ when you invest in all new real energy options ... like SOLYNDRA which actually created new and working technology ...

but got out priced by CHINA FLAT PANEL PRICE DUMPING ...

One more thing to sleep on tonite ... OBAMA HAS MORE OFFSHORE OIL DRILLING TODAY than The Oil President Bush and The Oil VP Cheney ever did ... SO DONT BELIEVE FOX and BECK and LIMBAUGH ...

get the real US offshore oil facts!

Sun, 06/17/2012 - 09:49 | 2533650 BeetleBailey
BeetleBailey's picture

Wow! Seriously twisted!

Sat, 06/16/2012 - 16:30 | 2532620 tahoevalleylines
tahoevalleylines's picture

US Rail Map Atlas Volumes from

"Rail Transport And The Winning Of Wars" by James A. Van Fleet

"Super Railroads"  by John Barriger

"The Politics of Energy" by Barry Commoner

"Under The Prophet In Utah" by Senator Frank J. Cannon

"Suntrain Transportation Corporation" by Christopher C. Swan

"Peeking At Peak Oil" by Kjell Aleklett

"The End Of Suburbia" by James Howard Kunstler

"Iran/Syria/Egypt/Israeli War Scenarios by Tony Cordesman (ISIS)

"The End Of Growth" by Richard Heinberg

"Report to The Congress on Peak Oil" by Robert L. Hirsch

Chris Skrepowski; Rep. Roscoe Bartlett (R-MD); Jan Lundberg;

ASPO Newsletter 42 article 374; ASPO Newsletter 89 article 1037

James Chapt. 5

"Peak Oil and Foreign Policy"  by Lionel Badal (oildrum node #5672)

"Isabel Piczec Image Found"

Sat, 06/16/2012 - 11:55 | 2532175 DaveyJones
DaveyJones's picture

if only crap had a good eroei

Sat, 06/16/2012 - 15:18 | 2532517 Jim Quinn
Jim Quinn's picture

Has Aziz tried to fill up his tank with gold lately.

This was one of the biggest fluff pieces I've ever read on ZH, devoid of facts or anything other than the standard talking points of those who choose to believe fantasy stories about vast quantities of shale oil that will power us for centuries.

He actually believes the self reported oil reserve figures from Middle East countries. I bet he believed Bernanke in 2005 when he said the housing market was solid.

His deep thoughts on renewable energy are on par with Al Gore level wisdom.

Only dumbasses like Grey Ghost would buy this load of bull. It helps if your IQ is below 50.


Sat, 06/16/2012 - 16:11 | 2532593 LULZBank
LULZBank's picture

Hes a tarder, remember that.

Sat, 06/16/2012 - 22:17 | 2533015 tmosley
tmosley's picture

LOL, your response is "you can't eat gold".

You accept data that confirms your hypothesis, and reject data which doesn't.  How very Ba'alish of you.

Sat, 06/16/2012 - 22:25 | 2533026 Aziz
Aziz's picture

"I bet he believed Bernanke in 2005 when he said the housing market was solid."


Though Bernank's position at the time was the conventional wisdom, just as imminent (-ish) peak oil is conventional wisdom today. Conventional wisdom gets smashed more often than not by reality. 

Riddle me this: how many times have Malthusians been right about anything? 

(The answer is zero — Malthusianism is stupid and awful).

Sun, 06/17/2012 - 09:30 | 2533592 Jim Quinn
Jim Quinn's picture

Your article is a storyline. You don't back up your storyline with facts. There is a reason it has a 2.5 rating.

Peak oil is not the conventional thinking. That is a ridiculous comment. 95% of the public has never even heard the term.

Oil has risen in price from $23 a barrel in 2002 to $84 a barrel today, a 365% increase in 10 years. Is this because we are swimming in excess supply?

I like facts. You provided us with a BP chart. Everyone knows BP is beyond reproach regarding facts and honesty.

You provided us with self reported oil reserve figures. Have you ever investigated the huge increase in reserves for every Middle East country when OPEC agreed to output quotas based on size of reserves.

I think it is sad that the vast majority of the population will soak in these storylines without ever investigating the facts. It is clear that you don't even understand the concept of peak oil.

The readers of ZH have judged your product and it is sorely lacking.

Sun, 06/17/2012 - 00:31 | 2533181 greyghost
greyghost's picture

but but jimmy the point is why should we believe "your" bullshit?? especially now that you defend you position by moronic name calling. after your rants against other posters today tell us why we should believe your theory...a theory, that all in the field do not agree with.

Sun, 06/17/2012 - 09:30 | 2533601 Jim Quinn
Jim Quinn's picture

Ideolgues with no facts or desire to examine the facts resort to calling facts theories. It is a classic Republican methodology.

I've certainly worked you into a lather. Stop foaming at the mouth and try thinking for a change. It won't hurt your brain if you try thinking. Repeating talking points over and over must get tiresome.

Sat, 06/16/2012 - 22:15 | 2533011 Tad Ghostal
Tad Ghostal's picture

Dear author--

Peak oil isn't just about peak reserves--it's about peak *production.*

Try to grow the global economy without growing the total energy input at a near commensurate amount.  Let's see how that works.




Sat, 06/16/2012 - 22:21 | 2533019 tmosley
tmosley's picture

Try to grow energy production with a government bureaucracy that is against you every step of the way.  That is the real point.  If it weren't for government regulation on nuclear power, we would all be swimming in energy from thorium.  But regulation grows for its own sake, and can only be overcome by efficiencies that increase exponentially forever in spite of said regulation.  Computation has managed to do that.  Energy production has not.

Sun, 06/17/2012 - 09:05 | 2533559 clymer
clymer's picture

I would love to read some facts regarding different energy technologies that have been supressed, bought-out, buried or ignored at the hands of those who have constructed the framework of modern civilization around oil consuption.

This would make for an interesting read...



Sat, 06/16/2012 - 10:56 | 2532003 Spastica Rex
Spastica Rex's picture

Pass the popcorn.

Sat, 06/16/2012 - 11:44 | 2532137 Republi-Ken
Republi-Ken's picture

ASSIZ I see you AGREE WITH OBAMA 100% in his national energy strategy ... 'all of the above' ... and be willing to lose $ when you invest in all new real energy options ... like SOLYNDRA which actually created new and working technology ... but got out priced by CHINA FLAT PANEL PRICE DUMPING ...

One more thing to sleep on tonite ... OBAMA HAS MORE OFFSHORE OIL DRILLING TODAY than The Oil President Bush and The Oil VP Cheney ever did ... SO DONT BELIEVE FOX and BECK and LIMBAUGH ... get the real US offshore oil facts!

Sun, 06/17/2012 - 04:45 | 2533372 falak pema
falak pema's picture

lots of hot air and passion on this thread; hows your popcorn consumption going?

Sat, 06/16/2012 - 10:59 | 2532007 Montecarlo
Montecarlo's picture

Great - another strawman for peak oil. Measured reserves have absolutely nothing to do with how fast it can be brought to the surface. It's the same mistake people make when they assume commercial aircraft get poor fuel mileage because they're fast. See

Just keepin' it real.

Sat, 06/16/2012 - 11:15 | 2532033 Errol
Errol's picture

Montecarlo is quite correct; flow rate is more important than "reserves".  Shale fracking is a great case in point;  oil is collected from billions of little cracks in the very low permeability shale.  Within a couple of years, production from a fracked well drops to single digit barrels per day.  Compared to collecting oil from a permeable reservoir that was collected by geologic forces over millions of years, fracking (or tar sands, for that matter) have a very low return on the energy invested to recover the oil.

What this means in practical terms is that society has WAY less energy profit (surplus) to distribute for malinvestment, corruption, and bread and circuses.  The US has tooled up for an insane flow rate - 20 million barrels of oil a day; any significant amount less results in economic contraction, which results in compound interest not being payable and social safety net promises not being kept.

All techno-cornucopian fantasies aside, this will not end well.

Sat, 06/16/2012 - 11:20 | 2532060 Jack Burton
Jack Burton's picture

Very good take on the situation. I smell way too much politics in the guest post and way too little science and statistics.

All this oil the US has just waiting to be drilled and pumped, at what price is it going to be available to the refinery?

The fact that we even frack and deep water drill and mine tar, doesn't that prove the REAL basis of Peak Oil? It's not how much there is, it is how costly it is to get. This ain't the same as a quick drill into a shallow ocean of oil, built up over millions of years in the very special places where oil like that can form and be capped in and not subject to plate tectonic disruption.

The President of the USA , it is said, has stopped the oil compnaies drilling. I ask anyone, please show me where the layed up rigs are stored and are not allowed to be employed.

Sat, 06/16/2012 - 11:52 | 2532160 jerry_theking_lawler
jerry_theking_lawler's picture

Rigs are not 'layed up'. They have just been moved to other countries.

Sat, 06/16/2012 - 11:53 | 2532165 chistletoe
chistletoe's picture

This tired lie has been repeated over and over again ad nauseum ever since Hubbert made his first predictions.


Peak oil is not about the reserves, its about the flow.  (sound familiar, Tyler????)


The main reason why oil prices have plummeted since 2007 is that demand has plummeted ....of ocurse, the same people why deny ppeak oil also deny that the world has gone into a deep recession ... but even the US energiy Information Agency is willing to admit that the US usage of petroleum products had declined by over 2 million barrels/day since 2007 ....


But they can say whatever they will, the marketplace keeps on speaking louder and louder .... because without unlimited sources of cheap energy, investment in growth cannot happen, and capitalism itself is doomed .... which more and more people, even the sheep, are beginning to understand ....

Sat, 06/16/2012 - 14:27 | 2532434 economicmorphine
economicmorphine's picture

Thank you Chistletoe.  You've done your homework, as I am familar with the EIA numbers.  You are correct on all counts.

Sat, 06/16/2012 - 11:35 | 2532108 EscapeKey
EscapeKey's picture

Whether you believe in peak oil or not, either we have a financial crash, or oil is to become ever more expensive.

Last year production costs increased 26% y-o-y, while the unit cost of production increased by 21% y-o-y to US$35.88/bbl

The marginal cost of the 50 largest oil and gas producers globally increased to US$92/bbl in 2011, an increase of 11% y-o-y and in-line with historical average CAGR growth.

Sat, 06/16/2012 - 11:00 | 2532009 superflyguy
superflyguy's picture

The only thing I'm sure we'll never see is peak bullshit.

Sat, 06/16/2012 - 11:08 | 2532024 Ignatius
Ignatius's picture

Peak oil, yes.  Peak BS and stupidity, never on any meaningful time scale.

Sat, 06/16/2012 - 11:35 | 2532111 Overfed
Overfed's picture

I dunno. I tend to think the supply of bullshit is indeed unlimited.

Sat, 06/16/2012 - 11:01 | 2532011 zilverreiger
zilverreiger's picture

What does it look like for the whole sector instead of 1 company? and whats the proportional demand growth?

Sat, 06/16/2012 - 11:01 | 2532012 LeisureSmith
LeisureSmith's picture

Chavez must be close to doing the Norwegian Blue Tango, BP here's a napkin, youre drooling.

Sat, 06/16/2012 - 11:01 | 2532013 EmileLargo
EmileLargo's picture

The Peak Oilers have a bad track record at prediction. How many times in the last two decades has Colin Campbell predicted Peak Oil? 


Sat, 06/16/2012 - 11:06 | 2532018 aminorex
aminorex's picture

You have a bad track record of evaluating predictions.  Peak is past.  It's not a prediction anymore, it's hindsight.

Sat, 06/16/2012 - 11:16 | 2532048 tmosley
tmosley's picture

No, it plateaued, indicating there is no net demand growth.  If it were supply limited, production would have fallen and oil price would have lead everything else up.  Instead, oil price continues to remain steady in real terms, while the prices of most other things fall in real terms.  You know, like in every other depression that has ever been caused by government excess.

But then, peak oilers ALWAYS think this time will be different, despite both history and current evidence.

Sat, 06/16/2012 - 11:23 | 2532070 Zero Govt
Zero Govt's picture

the peak oilers always come out from under their rocks same time as peak oil price

...about every 40 years on average

still way too often, wish we could find them a heavier rock and just shut 'em up

Sat, 06/16/2012 - 11:57 | 2532166 hedgeless_horseman
hedgeless_horseman's picture



Please, describe for us the shape of this curve, then give your explanation for the data behind it.

Sat, 06/16/2012 - 12:05 | 2532190 Almost Solvent
Almost Solvent's picture

Wait, that chart is not correct, or the government is the reason behind it. 


Oil will never run out, it's our doG given right. 


Plus, there was never peak whale oil nor are the seas filling with jellyfish becasue native fish stocks have peaked. 



Sat, 06/16/2012 - 22:29 | 2533035 Aziz
Aziz's picture

The black swan the peak oilers are missing is only counting conventional (by definition a conventional representation of a Hubbert curve in one state is an extremely limited representation of energy needs/output).There are lots and lots of non-conventional technologies that right now exceed the EROEI of conventional, and which are economically viable today, becoming moreso as conventional depletes. This is one salient example (there are plenty of others)

I am right. I will stick my neck and ass on the line and take the downvotes so I can be proven right in twenty years. 


Sat, 06/16/2012 - 23:13 | 2533100 Hulk
Hulk's picture

Do the simple math aziz, these technologies do not scale...

Sat, 06/16/2012 - 23:39 | 2533130 hedgeless_horseman
hedgeless_horseman's picture



It sounds like maybe Aziz has never walked around a super tanker or an Iowa corn field.  His mind seems limited to the corner petrol station as a scale reference for energy sources.

Sat, 06/16/2012 - 23:56 | 2533135 Aziz
Aziz's picture

If Joule Unlimited fails to scale (the "simple math" suggests it will scale, but the proof of the pudding is in the eating), then something similar will scale. We have at minimum 50-100 years of shale oil (etc) to find a better replacement. If we had no promising tech, then I'd be worried, but there are SO MANY technologically and economically viable alternatives — the various forms solar-electric, thorium, all the various solar-liquid photosynthetic fuels, etc. It really is just a case of getting one or two to scale, and there are MASSIVE economic incentives there to make that happen.

I'm way more worried about breakdowns due to man-made problems, like war. And beyond that there are some bigger completely unavoidable threats like gamma ray bursts and supervolcanoes, but if we fall to one of those, it really isn't our fault. 

Sat, 06/16/2012 - 23:42 | 2533106 hedgeless_horseman
hedgeless_horseman's picture



I am right. 

You sound very certain, so you must have learned a few little details like what Joule Unlimited's plan is for a scalable nitrogen source.  Are they using a cyanobacteria?  What are the water requirements per barrel of oil.  Please, explain this, "one salient example," to us.  

If anyone thinks that the tar sands are water intensive, I have a feeling you haven't seen anything until you've seen mass produced fuel from bacteria.

Sat, 06/16/2012 - 23:53 | 2533141 Aziz
Aziz's picture

Yeah, it's a GM cyanobacterium, and it's extremely water-intensive. There are technological hurdles, and I'd be more optimistic about Joule if we had cheaper large-scale atmospheric-water generation and nanoscale desalination tech today. But I think the incentives are big enough that if Joule fails, then someone else will succeed in making this process (or a variant) work for the mass market. The person who cracks this and brings it to scale will be the richest person on the planet.

Sat, 06/16/2012 - 12:12 | 2532193 Zero Govt
Zero Govt's picture

Hedgeless -  it's a black on white chart with a blue volume indicator/scribble and very worryingly an inscription above it saying, "US Govt statistics" (ie. BS Warning Alert)

How did i do?

Sat, 06/16/2012 - 12:18 | 2532220 hedgeless_horseman
hedgeless_horseman's picture



I am pretty sure that our governments want us to believe that there is more oil remaining in our energy endowment, not less.  Do you disagree with this as well?

Sun, 06/17/2012 - 16:32 | 2534730 Zero Govt
Zero Govt's picture

Hedgeless, yes i do disagree with the view Govt wants us to believe there's more oil than remaining. You can check out the international reserves list which is a pack of lies.

The UK itself has been claiming the UK has only 4 years reserves left... for each of the past 40 years!!!!

There's 1,000 years oil, coal and gas left ...let your Great, Great, Great x5 Grandkids worry about Peak Oil ...chill out dude

Sat, 06/16/2012 - 13:26 | 2532340 Marginal Call
Marginal Call's picture

You are a fucking idiot. 

Sat, 06/16/2012 - 15:04 | 2532485 UrbanBard
UrbanBard's picture

Oil fields tend to fall off if you don't keep drilling. Prudhoe Bay was expected to last only 15 years and we are going on 35 years now. ANWR was expected to replace it, but Environmentalist fanatics have blocked that.

We are not running out of CHEAP oil, because the technology keeps improving. There are huge amounts of oil we cannot exploit because the price of extracting it is higher what it can be sold for. Technology keeps lowering the cost of extraction, so the pie keeps getting larger.

Peak Oil is Socialist dogma; it ignores the incentives of markets. Higher prices cause people go out and find more oil. Government regulations limit the places where they may drill. The US Continental shelf has been declared off limits to drilling and it is restricted in the Gulf of Mexico. There is more oil in Western Colorado Tar Sands than in all of the Mideast, but the Interior Dept will not give licenses to exploit it.

Fracking caught the Environmentalists off guard; they hadn’t closed off that loophole. It will be outlawed soon enough.

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