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The Race For BTU Has Begun

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Submitted by Chris Martenson contributing editor Gregor Macdonald

The Race for BTU

The world's major central banks -- including the Bank of Japan (BOJ), the European Central Bank (ECB), and the Federal Reserve -- appear to have finally won a major battle in the deflationary war that broke out five years ago in 2007. While the ultimate victor is yet to be determined, it now seems likely that a period of nominal growth could ensue for another two years, perhaps even longer.

This will not be high-quality growth. And little of the growth will be real.

Commodity prices will surely eat away at most, if not all, of any gains that may occur in global GDP. Additionally, while non-OECD growth actually has a chance of achieving some GDP gains in real terms, the prospects for the OECD are not as encouraging.

The Race for BTU Has Begun

It’s important to put yourself in the minds of OECD policy makers. They are largely managing a retirement class that is moving out of the workforce and looking to draw upon its savings -- savings that are (mostly) in real estate, bonds, and equities. Given this demographic reality, growth in nominal terms is undoubtedly the new policy of the West.

While a 'nominal GDP targeting' approach has been officially rejected (so far), don't believe it. Reflationary policy aimed at sustaining asset prices at high levels will continue to be the policy going forward. 

While it’s unclear how long a post-credit bubble world can sustain such period of forced growth, what is perfectly clear is that oil is no longer available to fund such growth. For the seventh year since 2005, global oil production in 2011 failed to surpass 74 mbpd (million barrels per day) on an annual basis. But while the West is set to dote upon its retirement class for many years to come, the five billion people in the developing world are ready to undertake the next leg of their industrial growth. They are already using oil at the margin as their populations urbanize. But as the developing world comes on board as new users of petroleum, they still need growing resources of other energy to fund the new growth which now lies ahead of them.

This unchangeable fact sets the world on an inexorable path: a competitive race for BTU.

When Oil Can't Take You There

It was not supposed to be this way.

Less than ten years ago, the universal assumption was that liquid BTU would ferry the world through its next phase of growth. The central thesis underpinning these forecasts, of course, was a belief in the large size of the world's total resource base. Because this view was so widely shared by geologists, its soundness was not questioned. It’s critical to understand that within the industry itself, there was a nearly universal assumption that higher prices would make the next tranche of oil resources commercially economic -- and easily so.

For example, when ExxonMobil declared in early 2004 that they could bury the market in oil should prices ever move above $40 a barrel, they believed that forecast very strongly.

Let’s consider that the role of the petroleum geologist in this regard, whose task is to locate and make recoverable these resources. It was not then, nor would it be now, a very appealing prospect for that professional to consider that the next set of resources might be so expensive to develop that many economies and regions might not be able to afford them. You can see such perspectives in books that appeared 4-5 years ago, such as The Myth of the Oil Crisis, which correctly identified the vast oil resources still to be extracted, but missed the slow rate at which these resources would be developed. Indeed, if there is a single concept that trips up experts and laymen alike, it is the changing rate at which many natural resources have started to come to market in the past decade.

And because of this, we've seen a number of forecasts for significantly higher oil production coming from the media and the financial sector during the past few years.

Last autumn, for example, I chronicled the flurry of exuberant calls for US oil independence and showed that a 2 mbpd decrease in US oil consumption had been completely marginalized in favor of a 0.5 mbpd increase in order to deliver a positive headline that the US was becoming less dependent on foreign oil because of increased supply. In Selling the Oil Illusion, American Style, I noted that such an uptick in US triumphalism was likely to accompany high oil and gasoline prices, as a way for the US to tell itself a reassuring story while the pressure increases on politicians and policy makers.

Indeed, Dan Yergin’s There Will Be Oil in last year’s Wall Street Journal was the start, I think, of a campaign to pressure the government to open more lands for drilling in the United States. Since then, high gasoline prices have been all the rage on every blog, talk show, public news radio station, and in the media at large. However, not since those naive days of 2004-2005, when oil first crossed the $40 mark, have I seen such an outlier supply call than the one that came through Citigroup in just the past few weeks.

The Latest Big Call: North America as Oil Giant

Ed Morse leads an energy research team at Citigroup and is well known for accurately calling oil’s price in 2008. But Citigroup's recent call for a potential doubling of North America's liquid petroleum production over the next ten years seems little more than a dream-wish.

Once again, we turn to the Wall Street Journal, which has now shown a definite habit for providing free space to those who call for North American energy abundance and independence. Speaking of Canada, the United States, and Mexico, Mr. Morse writes:

….theoretically total oil production from the three countries could rise by 11.2 million barrels per day by 2020, or to 26.6 million barrels per day from around 15.4 million per day at the end of 2011.     

(Source)

What Mr. Morse fails to mention in his op-ed is that the rate at which Canada, US, and Mexico would have to produce this new oil to meet his prediction would require new oil development and production at a rate of growth seen in the boom-days decades ago, a rate that is simply no longer possible.

Yes, the United States doubled its production of crude oil in 30 years between 1940 and 1970. Yes, from 1970 to 2000, Mexico nearly quadrupled its production of oil. Yes, Canada doubled production from 1980 to 2010. But let’s consider the time span of those periods: They were all 30-year timeframes, not 10-year timeframes.

More important is that for the US and Mexico, the peak of oil production is now in the past. The US peaked in the early 1970’s, and Mexico peaked in the last decade as its singular giant, Cantarell, entered decline. Only Canada has been able to inch up production, but there, too, lies an overlooked barrier: Again, the rate at which Alberta Tar Sands oil is developed and then produced is much slower than conventional oil.

Mr. Morse and the team at Citigroup have made the same mistake that was more prevalent a decade ago. They have mistaken the size of the resource base for the actual flows that are now economically, and geologically, possible.

Rate-Limiting Realities

Have you tired yet of the word rate?

Enrolled members of ChrisMartenson.com read my discussion of the two below charts earlier this year. The charts show two different forecasts, five years apart, of future oil production from Canada -- much of which has depended on growth from the Alberta Tar Sands. However, I am using them again in the face of the Citigroup claims so that a wider audience can see how limited the rate of the growth can be, as we face the next set of oil resources.

Recall too that it’s not just Citigroup; many Americans and US politicians believe that Canada is a petro-giant who will easily be able to increase oil production quickly to feed future US demand.

Moreover, lest the implication go unnoticed, Ed Morse’s team did indeed (rather foolishly in my opinion) not only call for a potential doubling of liquid petroleum production by 2020, but went on to claim this would be enough supply to actually move the price of oil downwards, to $85 a barrel by that time:

Excess Canadian crude oil produced from oil sands is expanding at a rate of one million barrels a day every five years. The more that's produced, the less of a market there will be for oil from Venezuela and some other OPEC member countries with similar-quality oil, requiring them to either curtail production or lower prices. Even if oil prices rise in the medium term, we expect 2020 prices to be no more than $85 per barrel, compared with today's prevailing global price of $125.

It is quite incomprehensible that CITI could make such a call. I must be blunt: this is not serious forecasting, and there is no support in current trends -- or those of the past 5-8 years -- that would support such a price call.

Even CERA, Cambridge Energy Research Associates, has logged the explosion in the costs to bring on the marginal barrel of global supply, as has IEA Paris, and other energy teams such as Barclays.

Essentially, the CITI team is calling for a price of oil 8-10 years from now of $85 dollars a barrel, which is essentially the price already needed today to bring on a marginal barrel of supply.

From Africa to Brazil, and from Russia to Canada, there is precisely nothing in the trends of the past 10 years that indicates finding and exploration costs for new oil are either set to fall or even level out. Geology and the cost of energy itself preclude such a possibility.

But as I mentioned, it is not just economists who mistakenly project fast rates of development from the domain of stubborn, slow, physical reality of the world’s resources. The following two charts show the forecast of future production from CAPP--The Canadian Association of Petroleum Producers. The first chart is from 2006, and projects production through 2020:

Basically, in 2006 (which significantly raised the forecast from the year prior), the industry expected Canada to be producing 3.5 mbpd of oil by 2010; 3.75 mbpd by 2011; and 4 mbpd by 2012!

Now here is the second chart, from 2011, forecasting production out to 2025.

However, 2010 saw only 2.7 mbpd of annual production.

More revealing is that back in 2006 (the first chart), the industry expected Canada to be approaching 4 mbpd of production by 2011-2012. However, the latest data shows that the 2011 annual average only reached 2.9 mbpd, with recent months hitting 3 mbpd. In other words, the industry itself, on a five year time-frame, missed its forecast by nearly a million barrels. That is not a small miss for country producing only 3 mbpd.

But given that this is the nature of new oil resources, we should only be surprised that analysts such as the team at Citigroup should have the bravado to call for future production growth at a rate totally unsupported by the nature of these resources. 

The Race for Resources

What the team at Citigroup and other so-inclined geologists and economists are correct about, however, is that human economies will undoubtedly go after the next layer of fossil fuels -- at least until the economics of such a quest beats us back towards some other set of alternatives.

So while North American oil production has virtually no chance to increase, as believed by the cornucopians, there is little doubt that in the quest to gain relief from permanently high oil prices, every possible BTU in North America will be accessed and utilized. More broadly, as the acceptance of the new era of high-priced oil finally (and I do mean finally) broadens out to the wider public, the scramble for solutions will also unfold.

What do I mean by permanently higher oil prices? Well, given that the cost of the marginal barrel has risen so much the past decade and that Asia continues to add to its demand in a relentless fashion, this price forecast from the U.S. Energy Information Administration (EIA) in Washington looks about right to me: (Annual Energy Outlook 2012):

The lower price path offered by EIA is now out of the question. Only a deflationary depression, sustained for more than several years, would allow for such low oil prices.

Because of geology, and because the non-OECD can afford even higher prices, the world faces a price path -- with large oscillations -- between the Reference case and the High Oil Price case. 

Transitioning to Other BTUs

In Part II: Promising Investments as the Race for BTUs Heats Up, I lay out the latest global energy data showing how the world is already trying to transition away from oil and slamming the door shut on the prospect for any new net growth in global oil production and supply.

Are we closer than ever before to a tipping point, a regime change in which acceptance of high oil prices will broaden out in society? Four years of extraordinary, emergency provision of new credit by Central Banks should be sufficient to create a two-to-four-year mini-boom dominated by the world digging up fresh BTUs as the realization finally sets in that no more oil is forthcoming.

Finally, I identify 2-3 areas of investment that will play upon the coming scramble new energy resources.

Click here to read Part II of this report (free executive summary; enrollment required to access).

 

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Wed, 04/04/2012 - 16:09 | 2317461 lolmao500
lolmao500's picture

Wind power, solar power, nuclear energy through thorium...

http://www.livescience.com/19461-bacteria-deepwater-horizon-tar-balls.html

Deadly Bacteria Lurk in Deepwater Horizon Tar Balls in forum

Nearly two years after the Deepwater Horizon disaster gushed millions of barrels of oil into the Gulf of Mexico, tar balls from the spill still turn up on Alabama's shores after storms. Now, one researcher is recommending that people steer clear of these tar balls after studies find them chock-full of potentially deadly bacteria.

In research published online November 2011 in the journal EcoHealth, Auburn University microbiologist Cova Arias and colleagues discovered that Deepwater Horizon tar balls found months after the spill contained high levels of bacteria, including 10 times the level of Vibrio vulnificus as found in the surrounding sand, a finding first reported by the Associated Press. V. vulnificus is the leading cause of seafood-borne disease fatalities nationwide, and it has a fatality rate of 20 to 30 percent when it infects skin wounds.


Thu, 04/05/2012 - 08:06 | 2318894 GreenPlease
GreenPlease's picture

I have to ask.... what will wind power, solar power, and nuclear power do to quench our liquid fuel thirst in the short-run? What about in the next 10-15 years? Don't get me wrong, I'm a huge fan of the LFTR design and I believe that it's one of the few silver bullets that we have in an arsenal that is otherwise chock-full of silver bee-bees. However, it does not solve the liquid fuel crunch that the world is facing. 

Citi's projection is a joke. I'd be curious to know what their loan book looks like with regards to the shale industry. If they've put their money where their mouth is, they're in for some serious pain in the next five years.

FWIW, I can see Canadian crude production expanding rather rapidly (1mbpd/5years) as significant advances are being made in in-situ technologies. However, I expect that the U.S. will experience an oil decline shock in 2-3 years as we discover that horizontal drilling merely flattens the curve in the short run and then causes a steeper decline later on.

Wed, 04/04/2012 - 16:17 | 2317462 Gully Foyle
Gully Foyle's picture

Hey now Binky, what happened to this?

http://www.utopiaforums.com/boardthread?id=politics&thread=8362

Toshiba is also working on its own mini nuclear reactor, the "4S", which the company says stands for "super-safe, small, and simple". The 4S is based on a smaller 10 MW design that can last 30-40 years before refueling. The 4S is sodium-cooled, and uses liquid lithium-6 to moderate the reactor, instead of conventional control rods. Like Hyperion's design, the reactor is totally sealed and requires no maintenance or operation.

Toshiba says the reactor will make power available for as little as 5 cents/kWh. A demonstration version of the 4S is planned to be online in 2012, and will be sited in the Alaskan village of Galena. After that, Toshiba plans to offer the 4S for sale throughout North America and Europe.

https://en.wikipedia.org/wiki/Toshiba_4S

The Toshiba 4S (Super Safe, Small and Simple) is a micro nuclear reactor design.

The plant design is offered by a partnership that includes Toshiba and the Central Research Institute of Electric Power Industry (CRIEPI) of Japan.[1]

The technical specifications of the 4S reactor are unique in the nuclear industry.[2] The actual reactor would be located in a sealed, cylindrical vault 30 m (98 ft) underground, while the building above ground would be 22×16×11 m (72×52.5×36 ft) in size. This power plant is designed to provide 10 megawatts of electrical power with a 50 MW version available in the future.[3]

The 4S is a fast neutron reactor. It uses neutron reflector panels around the perimeter to maintain neutron density. These reflector panels replace complicated control rods, yet keep the ability to shut down the nuclear reaction in case of an emergency. Additionally, the Toshiba 4S utilizes liquid sodium as a coolant, allowing the reactor to operate 200 degrees hotter than if it used water. Although water would easily boil at these temperatures, sodium remains a liquid; the sodium coolant therefore exerts very low pressure on the reactor vessel even at extremely high temperatures.

The Toshiba 4S Nuclear Battery is being proposed as the power source for the Galena Nuclear Power Plant in Alaska.[4][5]

[edit] Current developments

Currently Toshiba, together with its Westinghouse subsidiary, is in the preliminary design review stage of the Design Certification process before the United States Nuclear Regulatory Commission (USNRC).[6] Application for certification of the design is currently planned for 2012 when the standardized Design Certification application will be filed for the 4S. The most recent meeting with the NRC took place on August 8, 2008, at which time the NRC's staff met with representatives of Toshiba and Westinghouse for a pre-application presentation of a Phenomena Identification and Ranking Table (PIRT) for the Toshiba 4S (Super-Safe, Small and Simple) reactor. Lawrence Livermore National Laboratory recently released an interesting study on the Toshiba 4S design, which provides an overview of the 4S design and suggests that certain goals may be easier to meet if lead is used as the coolant rather than sodium, due to lead's high transparency to neutrons and low transparency to gamma radiation, though lead has a higher melting point than sodium does.[7]

The NRC received the latest version of the letter of intent from the designers of the reactor as of March 13, 2009. The approval process is on track for official submission to the USNRC in October 2010 of a standard application for Design Certification. During the week of October 16, 2009, persons or organizations unknown submitted a Freedom of Information Act request to the USNRC requesting that "documents related to the Super-Safe, Small and Simple (4s) Nuclear Reactor from Toshiba Corporation particularly related to possible placement in Galena, Alaska, including tech info on reactor, safety assessments, nuclear material security, etc." be released to the requestors.[8]

A problem of small nuclear reactor design seem to be that insurance and legal requirements are the same for power plants of any size. The NRC is aware of this barrier, and has held a number of public reviews to devise a new scheme that would make it financially feasible to build and operate small reactors, while at the same time maintaining appropriate level of protection at large LWR installations, [9] the latest of which took place in December 2010, setting January 2011 as the time frame for preparation of official white paper proposal.[10]

http://theenergycollective.com/rodadams/33661/bill-gates-toshiba-traveli...

Bill Gates, Toshiba, Traveling Wave Reactors, Small Reactors

There is certainly some truth to what you might have been reading about the Toshiba-Gates discussions. Gates and TerraPower are definitely interested in developing reactors that can burn depleted uranium and used nuclear fuel for a very long time before they need to be refueled. Toshiba definitely is interesting in designing and building reactors of all sizes - from their 1358 MWe ABWR's to their 1154 MWe Westinghouse AP1000's (Toshiba owns 70% of Westinghouse), to their 10 MWe sodium cooled 4S reactors that might end up powering small villages in Alaska.

Wed, 04/04/2012 - 16:42 | 2317546 Ghordius
Ghordius's picture

I've never been fond of Bill Gates, but since he is supporting the Toshiba 4S I am willing to call him a friend. +1T

Thu, 04/05/2012 - 08:03 | 2318890 GreenPlease
GreenPlease's picture

I've been told by many in the industry that the 4S reactor won't make it for two reasons:

1. It doesn't close the fuel cycle

2. It's innovative enough that it would be a huge PITA to license in either the U.S. or Europe. It's a (very) safe design but Europe and the U.S. are essentially set up to exclusively license LWR designs. 

Wed, 04/04/2012 - 17:23 | 2317656 blu
blu's picture

I'll believe the Toshiba 4S is safe when the Japanese allow them to be built in a ring around Tokyo.

Wed, 04/04/2012 - 19:58 | 2318009 Seer
Seer's picture

And when Bill Gates himself moves into that ring!  Easy enough to promote a lab experiment far away from oneself.

Thu, 04/05/2012 - 05:05 | 2318742 dumbfounded
dumbfounded's picture

I’ll believe it’s safe when 50 years from now the guy who has just bought a dilapidated industrial property is not scratching his head and saying: “Well what’s this weird contraption here? Ah looks useless, we'll just knock it down and sell it for scrap with the rest”.

Wed, 04/04/2012 - 16:16 | 2317467 SheepDog-One
SheepDog-One's picture

'The US is now ready to dote upon its 'retirement class' for many years to come'...

'Dote' obviously meaning 'shit', I guess?

Wed, 04/04/2012 - 16:34 | 2317523 blu
blu's picture

Yeah I thought that was pretty funny. Who does he think we are, the Japanese?

The US powers-that-be don't give a flying fuck with a back-flip about the retirement class, having got their money.

No wait, I'm wrong. They still need the retirement class to provide a means to fund the for-profit "health care" system via their childrens' tax dollars.

Wed, 04/04/2012 - 16:40 | 2317542 NotApplicable
NotApplicable's picture

Dote = consume (think healthcare)

 

Wed, 04/04/2012 - 20:02 | 2318013 Seer
Seer's picture

Not to despair, this will be applied to younger generations as well, though for them the word would be capitalized.

Wed, 04/04/2012 - 16:13 | 2317468 Byte Me
Byte Me's picture

I know! Let's build shedloads of BWRs, run 'em on MOX with a once-through fuel cycle.

Yeah -- that'll work for the next century..

Wed, 04/04/2012 - 21:25 | 2318184 DosZap
DosZap's picture

Just find an old Duece and a Half, they run on old motor oil,gas,diesel,jet fuel..............and you can MAKE a hole whenever you need to get thru traffic.Huge Mutha's.

Doubles as a survival retreat on wheels.( GE Mini Gun extra),circa Vietnam era, no Horn REQUIRED!!!......

Wed, 04/04/2012 - 16:16 | 2317473 LawsofPhysics
LawsofPhysics's picture

Ah yes, big difference between available energy sources and the current burn rate avaibale to increase real productivity and GDP.  Opportunities will abound once all the bad debt and bad ideas are allowed to fail.  Until then, the sheep are busy buying the dip, so don't confuse them.

Wed, 04/04/2012 - 17:53 | 2317722 CrashisOptimistic
CrashisOptimistic's picture

"Even if oil prices rise in the medium term, we expect 2020 prices to be no more than $85 per barrel, compared with today's prevailing global price of $125.

It is quite incomprehensible that CITI could make such a call. I must be blunt: this is not serious forecasting, and there is no support in current trends -- or those of the past 5-8 years -- that would support such a price call."

 

I will disagree.  A price for oil of $85 and likely lower is in the cards for that time frame.  It's not at all absurd.

Oil's relentless crushing of the windpipe of society will destroy activity and thus consumption AND demand, both (in the world to come, they are not the same thing).

With low societal activity, oil price could be low.  If there is ever an attempt to increase societal activity, and reduce rate of population avalanche, oil price will spike again -- probably several times between now and 2020.  

But a called for price of $85 is not absurd for that reason.  If oil is in the process of starving hundreds of millions of oil consuming people in 2020, the price might very well be only $85.

Wed, 04/04/2012 - 18:30 | 2317813 CrazyCooter
CrazyCooter's picture

While no one can see the future, I understand the author's arguement like this:

The developing countries, who use very little oil per capita, use it in very productive ways. Consider a farmer who might have the choice between human labor, animal labor, and a tractor to achieve farm work. A gallon of diesel to this farmer is *very* valuable.

In developed nations, a gallon of diesel might be part of the cost of taking kids to soccer practice.

Because the oil supply can not expand rapidly enough to meet new demand, prices will stay high. I think this is why he focuses on rate so much, oil supply just isn't going to grow very much from these newer types of developments (e.g. oil sands).

Someone will buy the oil; increasingly that someone will want to do produtive things with it and consequently they will be willing to pay more.

But, that was my take on the article, which I liked by the way.

Regards,

Cooter

Wed, 04/04/2012 - 20:20 | 2318048 Seer
Seer's picture

Coot,

Folks in "developing" countries might appear to benefit from having access to more oil, but I'm not thinking that the equation supports it, not without it being some sort of State control that ensures (props up) pricing internally.  The export markets just aren't going to hold up any more.  Any "increased" productivity that such people might enjoy only would be experienced through exports, exports which would require: 1) Oil/energy for transportation; 2) Someone to export to (see all those debt-ridden countries out there?).

Especially with farming, the margins are hideous, even negative in most all cases (anything above subsistence level unless there's price "support" [read "subsidies"]).

I think that only countries with energy to export (they're internally sustainable [for now]) will be exporting to countries with food to export.*  Most other exchanges will be of less fundamental importance.  One could do some paring-up here, but off the top of my head I'm just not seeing India, which can't even feed itself, dealing food to the Saudis for oil: how robust will Saudi exports be once US military support collapses?

* How funny it is that Adam Smith stated that nations should only trade dissimilar goods (none of this country A selling autos to country B and country B selling autos to country A!).

Make no mistake about it, food WILL become more costly.  I'm just not thinking that the oil export model is going to hold up as you might suggest (or as your scenario would likely demand).  Good news for all the cornucopians is that there WILL be LOTS of oil left; the bad news is that they won't be seeing it (of likely benefiting in any way).

Wed, 04/04/2012 - 20:58 | 2318120 lincolnsteffens
lincolnsteffens's picture

No one seems to be factoring in the possibility of the on going weakness of the western nations populations to afford to buy stuff. If a major collapse does happen energy usage in the west will drop much further. If the west is in collapse and can't buy much cheap stuff from the east, the east will use less energy too at least in the medium term.  Prices could drop considerably in nominal terms until a genuine recovery gets rolling or inflation picks up.

Wed, 04/04/2012 - 21:20 | 2318176 Marginal Call
Marginal Call's picture

In that situation the can is just kicked down the road ala 2008.  Economy tanks, oil plummets.  Oil skyrockets back with minor recovery.

 

Most everyone has factored in a collapse one way or the other.  Either supply kills us, or the economy.  It's a death spiral either way.

Wed, 04/04/2012 - 21:31 | 2318194 DosZap
DosZap's picture

 If the west is in collapse and can't buy much cheap stuff from the east, the east will use less energy too at least in the medium term.

You checked the SO CALLED cheap stuff from the East lately?, well it damn sure isn't cheap.

I can wear out a pair of Tennis shoes in like 3-4mos,doesn't pay to pay a C Note for a good pair.

PayLess used to have Chinese tennis /walking shoes all day,every day for around $16/$17.00, 2pr for $32.00...............now a single pair from the East is over $34.00

Wed, 04/04/2012 - 16:18 | 2317479 SheepDog-One
SheepDog-One's picture

Anyone saying we just run along smoothly for years on $130 avg oil is hitting the crack pipe hard.

Wed, 04/04/2012 - 22:41 | 2318329 palmereldritch
palmereldritch's picture

Well, that's one way to keep it out of reach of the 'developing' world....

Wed, 04/04/2012 - 16:21 | 2317486 blu
blu's picture

Executive summary: Pumping oil is so last century. Get ready to dig everywhere all the time for your next tranche of BTUs. Oh and you better get there before the Chicoms and the Indians because they are in no mood to share.

Wed, 04/04/2012 - 16:28 | 2317505 hedgeless_horseman
hedgeless_horseman's picture

 

 

Executive Summary Summary: Resource Wars, bitchezzz!!!

Wed, 04/04/2012 - 16:44 | 2317554 Ghordius
Ghordius's picture

? All wars are about resouces.
about mine, not yours...

Wed, 04/04/2012 - 17:15 | 2317637 blu
blu's picture

Some wars are about God. And many others are about abstract profits or gain.

Going forward though, wars will be about resources. Period. We may as well call these The Eating Wars.

Wed, 04/04/2012 - 20:27 | 2318061 Seer
Seer's picture

"Some wars are about God."

Not in defense of religions with said "God," or "God" himself/herself (sorry, you're really not That important!), wars ARE fundamentally about resources.  I don't think that anyone cares, really, about someone else's "God" as long as one is capable of expanding.  Given enough resources it doesn't matter.  Only when there are insufficient resources does "God" get sucked into supporting wars: "God" then becomes the "moral" support for inflicting the necessary damage on the "other" in order to obtain resources.

Wed, 04/04/2012 - 20:53 | 2318111 TheGardener
TheGardener's picture

Well said. Nietzsche "spoke" about when people became in need of religion. Davila pointed out that all the major ones evolved about the same time (disregarding muslim heresies).

If you are pointing towards resources, take a quick lesson
of Hebrew grammar . Heche comes to mind.

Wed, 04/04/2012 - 22:29 | 2318312 disabledvet
disabledvet's picture

Anne Heche? I mean she's hot and all but when speaking of Nietzhe (sp?) she's not the first person i think of actually...

Wed, 04/04/2012 - 17:55 | 2317729 CrashisOptimistic
CrashisOptimistic's picture

Pretty close to dead on.  Every gallon of gasoline you conserve in the US is making life nicer for a Chinese military family.

Wed, 04/04/2012 - 16:25 | 2317491 ALPO
ALPO's picture

There are almost seven billion people on the planet. Most of those people are neither American nor useful to Americans.

Isn't there some way those excess people can be killed and their bodies rendered into a clean-burning environmentally-friendly fuel? That's the kind of bold solution our scientists should be working on!

 

 

Wed, 04/04/2012 - 16:31 | 2317510 Uber Vandal
Uber Vandal's picture

I think that the research into the soylent green fuel field came to an end around May, 1945.

Wed, 04/04/2012 - 16:26 | 2317493 Spitzer
Spitzer's picture

All bullshit.

The world is flooded with Nat gas. Whats it worth these days ? Sub $2.00 ? Nat gas will bring down crude demand but crude is just a trendier inflation hedge at the moment.

You can make jet fuel, solvents, and chemicals with Nat gas so I think this whole peak oil thing is way put of proportion.

Wed, 04/04/2012 - 16:49 | 2317567 Marginal Call
Marginal Call's picture

Drillers are going under at current prices, so that glut and price won't last long.  And how long do NG plays last if we shift our transportation system over?  We burn it up quick, there is no 200 years of it-that's a joke.

 

 

 

Wed, 04/04/2012 - 20:03 | 2318014 disabledvet
disabledvet's picture

well lets take a look then!
http://seekingalpha.com/symbol/slb?source=search_general&s=slb
i does appear this behemouth has been struggling for some time. with 91 billion in market cap i'd expect better as well...

Wed, 04/04/2012 - 20:31 | 2318068 Seer
Seer's picture

Is that 91 billion in worthless fiat?  When the masses lose faith in that fiat then what?

Comparing Monopoly money is fine as long as the game is going.

Wed, 04/04/2012 - 22:31 | 2318317 disabledvet
disabledvet's picture

alright fine! let's take a look at "worthless fiat" too!
man, that thing's all over the map too!

Wed, 04/04/2012 - 16:57 | 2317597 sangell
sangell's picture

Maybe, but burning natural gas to make kilowatts makes no more sense than burning oil for that purpose but that is where the US is heading. We've got coal, nuclear, even wind and sunshine to keep the lights on. Natural gas should be a transport and chemical feed stock fuel same as oil.

Wed, 04/04/2012 - 17:18 | 2317647 Bunga Bunga
Bunga Bunga's picture

"The greatest shortcoming of the human race is our inability to understand the exponential function."

http://www.youtube.com/watch?v=F-QA2rkpBSY

Wed, 04/04/2012 - 17:59 | 2317740 CrashisOptimistic
CrashisOptimistic's picture

75+% of crude BTUs go to transportation.

Not solvents.  Not chemicals.  They mostly use NGLs, not crude.

It is not easy at all to get crude level BTUs from natural gas.  A 42 gallon barrel of natural gas at room temperature and room pressure contains a BTU level roughly 1/1000th what is in a 42 gallon barrel of crude.

You have to start talking about LNG to get fuel tank densities that are competitive, and even if you do, all you have is 60% of the BTUs of a barrel of crude -- and it costs rather a lot of natural gas energy to power the refrigerator to freeze nat gas down to LNG temps.

If there were an easy answer, don't you think it would already be in place?

Wed, 04/04/2012 - 18:41 | 2317841 CrazyCooter
CrazyCooter's picture

Fun fact: natural gas is a major feedstock for the production of ammonia, via the Haber process, for use in fertilizer production.

Another fun fact: those plastic shopping bags they use as the grocery store are made from natural gas.

Regards,

Cooter

Wed, 04/04/2012 - 20:36 | 2318077 Seer
Seer's picture

Thanks for Fact #2, Coot!  I've been wondering what has been behind the "environmental" push to outlaw plastic shopping bags: I REUSE them for garbage rather than buying NEW "garbage bags" (maybe the "garbage bag" lobby is also behind this?).

Hm... I wonder whether Sptiz-boy is wanting us to subsidize NG more so that his blow-up dolls are cheaper?

Wed, 04/04/2012 - 23:57 | 2318499 Stuck on Zero
Stuck on Zero's picture

Another fun fact.  Natural gas is easily converted to methanol.  Methanol can go straight into most fuel tanks with a little dilution.

Thu, 04/05/2012 - 02:21 | 2318677 rufus13
rufus13's picture

"It is not easy at all to get crude level BTUs from natural gas."

Not "easy" in the sense that I "simply pay $4.13 per gallon and fill 'er up", but well within the technical and economic capability of a USA that makes it a national priority. Fischer-Tropsch plant on a big NG field could do exactly what SASOL does with remote gas fields: liquify and pipeline to urban area for use. Add an LFTR to the process and you don't burn up so much NG for heat, and you get a bunch of base-load electricity for your urban/industrial use as well as EVEN MORE liquified refinery base-stock. The big money in F-T is making industrial chemicals, not syncrude to make ICE fuel.  The Red Chinese have figured this out and are going full-speed-ahead with our money and our old Oak Ridge National Lab research papers saving them a decade or more of basic research. They KNOW it works, and so like with the A-Bomb, they will make it work. 

Cheers. 

Thu, 04/05/2012 - 10:26 | 2319310 Flakmeister
Flakmeister's picture

Gas to Liquids is a boondoogle....

Thu, 04/05/2012 - 13:21 | 2319892 earleflorida
earleflorida's picture

one barrel of oil produces 19.6 gal. of gasoline

ref: http://www.r3sciences.com/crude_oil_a_breakdown_of_re.html

Ps. Have they figured it out ?  Shell Oil is building a $10bl diesel = LNG, natural gas refinery in the Louisiana gulf as I write. So,... they have figured it out!

Wed, 04/04/2012 - 18:38 | 2317830 CrazyCooter
CrazyCooter's picture

Start here and get back to me when you are done reading ...

http://www.tfmetalsreport.com/comment/143046#comment-143046

(link goes to a solid opinion about why nat gas companies are going to implode at some point)

Regards,

Cooter

Wed, 04/04/2012 - 20:46 | 2318094 Taint Boil
Taint Boil's picture

 

 

Start here and get back to me when you are done reading ...

Good link - spot on.

Thu, 04/05/2012 - 00:22 | 2318550 lincolnsteffens
lincolnsteffens's picture

Pretty good CC. thanks for the link.

Wed, 04/04/2012 - 16:27 | 2317496 Alcoholic Nativ...
Alcoholic Native American's picture

4+ a dollar gas is killing the recovery.  .  My transporation costs are almost exceeding my income.  Throw in a lunch and im taking fucking losses every fucken day.  In fact the only reason I work anymore is so I can look down on these jobless bums.

This is one sorry ass recovery.  I feel like im doing it all by myself.

 

Wed, 04/04/2012 - 16:28 | 2317502 ALPO
ALPO's picture

Keep up the good work. Obama is counting on you.

 

Wed, 04/04/2012 - 16:32 | 2317515 yabyum
yabyum's picture

Alcoholic, When you  are done filling your Dodge Ram diesel for the second time this week to commute to you walmart job from your starter castle in the far flung 'burbs....ther aint nothing left for anything else.

Wed, 04/04/2012 - 16:42 | 2317549 NotApplicable
NotApplicable's picture

We're not all like you, Mr. AssumeTheWorstOfOthers.

Wed, 04/04/2012 - 16:57 | 2317598 yabyum
yabyum's picture

I assume nothing. I simply identify the base line American. Your results (and I hope they do!) may vary.

Wed, 04/04/2012 - 20:49 | 2318101 Seer
Seer's picture

Yeah, it's clear that you're exercising simpleness, in thinking.

I reside out in the country.  Yeah, lots of trucks (I'm still trying to get my hands on one!  I'm picky, waiting for something viable at the $2k range).  Know why?  Because LOTS of work happens here!  You city boys externalize this shit, you've got your nice shiny garbage trucks, tow trucks and other trucks.  Yeah, I see some rich fucks out here, ones that flaunt excess vehicles, and most of these are what so many of you all claim are the heart of our economy, these "small business" folks (I can't tell you how many stupid-assed businesses there are, all the horse-related shit, shit for the rich).

No, come up my street and talk to the guy whose truck is about as shitty a vehicle as you could NOT imagine.  It's beat to hell because he hauls wood in it, wood that he sells.  And down the road, there's a guy who finally got his beat up Dodge Ram pickup back together (rear up on blocks, I'm sure it was waiting for enough cash to fix it- not something someone with some fancy rig would/could do, no, they'd have to take it to someone for repair).

Yes, I'm well aware of the $40k+ shit that you might be referring to, but in NO way is it "base line!"  I'm quite certain that these things will make for good target practice (if the guy off in the distance didn't run out of .50 ammo in his semi-whatever-the-hell-was-making-all-that-racket-this-past-weekend gun.

Wed, 04/04/2012 - 16:40 | 2317513 Belarusian Bull
Belarusian Bull's picture

The growth is the problem. It does not matter if we discover new sources of energy or not, our planet is finite.

At some point  the planet won't be able to support increasing population, which means humans will have to die off a bit.  And technology can't solve this.

I sometimes trying to think about what is the true purpose of humanity. To destroy the enviroment and itself? To get back to primal roots of stone age and live like other animals? Hardly.

The only logical explanation i see, is to reach some point of global conciousness, where destructive desire to unlimited consumption will be held off (the same way  an addict restrains himself through his willpower) and the balance will once again be preserved. This will require a population of rational, critically thinking, educated, non-biased and open-minded human beings. Almost opposite of populance of primitive savages currently roaming Earth.

As will the way people think change, so will the economy. Austrian theory will always be relevant, since it derives from the way people behave and this behaviour is not set in the stone.

It sounds like a science fiction, though.

Wed, 04/04/2012 - 16:42 | 2317545 blu
blu's picture

The true purpose of humanity was to find a way to liberate all the buried carbon so that the earth could again be ice-free and a better growth environment for ... plants.

The plants never did buy that whole food chain deal. They and the fungus had it all worked out.

Wed, 04/04/2012 - 16:46 | 2317564 Belarusian Bull
Belarusian Bull's picture

I actually saw some show on local TV, saying that fungus is the mastermind of the planet and even we, are controlled by it. No bullshit, that what they really said.

Wed, 04/04/2012 - 16:51 | 2317579 Marginal Call
Marginal Call's picture

So the Rothchilds have some mangy ass athlete's foot.

Thu, 04/05/2012 - 00:05 | 2318513 Possible Impact
Wed, 04/04/2012 - 20:18 | 2318045 pvzh
pvzh's picture

Answer to the eternal question about the purpose of the human life: "Plastic!!!... Dumbass..." (George Carlin)

Wed, 04/04/2012 - 17:23 | 2317658 Seer
Seer's picture

"The growth is the problem."

What "problem?", you have objections to mass suicide?  Growth is great for "running the cycle!"  It's like children out playing in the yard, the play cannot end until someone gets hurt (well, or when the dinner bell rings)!

But, seriously, people talk like ALL we need is energy, forgetting that energy is the "means" with which we CREATE, and in order to CREATE we have to have other physical resources (can you say "rare earth metals?")  People just can't get these simple/easy equations down to save their asses!

Wed, 04/04/2012 - 18:38 | 2317834 Seer
Seer's picture

Someone apparently doesn't think physical resources are an issue...

Wed, 04/04/2012 - 17:47 | 2317709 Centurion9.41
Centurion9.41's picture

"our planet is finite"

 

Bull, do you realize they have not yet been able to prove how oil comes into existence? 

There are more than enough resources in the world to last a hundred more generations.  What is in question is the amount of marginal capital and growth needed to develop the alternatives to make the economic shift advantageous in the great relative game of fiat based economic systems.

Wed, 04/04/2012 - 18:47 | 2317857 Seer
Seer's picture

"do you realize they have not yet been able to prove how oil comes into existence? "

What part of the word "finite" do you not understand?  We're on a fucking ball circling in space.  This is NOT questioned by anyone other than the totally insane!

"There are more than enough resources in the world to last a hundred more generations."

I'm sure that's what the Easter Islanders also said, right before they perished.

How "much" is meaningless without adding the all-important part of the equation of growth rate.  Based on YOUR math even if we were to consume at the rate of 100-generations-worth in ONE generation we'd STILL have enough for 100 generations!

You're rowing in the water with only one oar: your logic completely, and utterly, FAILS!

"What is in question is the amount of marginal capital and growth needed to develop the alternatives to make the economic shift advantageous in the great relative game of fiat based economic systems."

Oh, I see, it's really only about how much money exists!  Apparently you need to watch this:

http://www.zerohedge.com/news/thought-experiment-why-not-just-print-prin...

Darwin award for you!

 

Wed, 04/04/2012 - 20:12 | 2318031 disabledvet
disabledvet's picture

all right, fine. let me fix it for you: "my resources are enough to last a thousand years whereas yours are only enough to last you into next week." is that better (logic)? now "soothe your trouble mind" and "party like it's Y2K."

Wed, 04/04/2012 - 20:59 | 2318122 Seer
Seer's picture

And there you have it! :-)

One of the Forbes clan pretty much all but stated it this way back in the early 1970s.  Said that the US should conserve its oil resources and consume others' first.  Uber capitalist Forbes was championing a socialist solution: total govt control over its resources!  If the Saudis would state anything similar the bombers would be flying to, well, "spread 'democracy'."

Wed, 04/04/2012 - 16:35 | 2317525 Jason T
Jason T's picture

More energy will have to come from human input.  

Wed, 04/04/2012 - 16:44 | 2317552 NotApplicable
NotApplicable's picture

Hey, get back to spinning that wheel!

Wed, 04/04/2012 - 21:01 | 2318128 Seer
Seer's picture

I  think that that's being covered pretty well.  Did you see the recent ZH article on obesity trends?  Energy reserves!

Wed, 04/04/2012 - 16:45 | 2317560 NotApplicable
NotApplicable's picture

Executive Summary: Entropy rules!

Wed, 04/04/2012 - 17:11 | 2317626 blu
blu's picture

You'd think more people would get that part.

The problem is that too many people were asleep during biology and physics classes. Anyone who was paying attention is probably having one of those deer-in-the-headlights experiences about now. The situation is not pretty, boys and girls. Not pretty at all.

Thu, 04/05/2012 - 01:53 | 2318661 John_Coltrane
John_Coltrane's picture

And to reduce entropy requires work or energy.

High entropy system:  dispersed crude in a rock formation

Low entropy system:  refined fuel products

Thus the problem of return on invested energy and of life itself.

Entropy is the arrow of time distinguishing past from future

Wed, 04/04/2012 - 17:21 | 2317651 Bunga Bunga
Bunga Bunga's picture

Why Americans still use British Thermal Units?

Wed, 04/04/2012 - 17:24 | 2317663 Moe Howard
Moe Howard's picture

I'm with you! ATUs from now on. Fuck the brits.

Wed, 04/04/2012 - 17:26 | 2317667 Seer
Seer's picture

So they can talk about using them when the British themselves have none.  I think that it's some sort of middle-finger thing, the American Revolution war and all...

Wed, 04/04/2012 - 17:36 | 2317685 Raymond K Hessel
Raymond K Hessel's picture

Because the metric system is stupid.

Wed, 04/04/2012 - 18:33 | 2317818 Bunga Bunga
Bunga Bunga's picture

Right, universities would make less money if they could not teach these simple metric tricks anymore.

Wed, 04/04/2012 - 19:30 | 2317948 oddjob
oddjob's picture

 Joules sounds way gay.

Wed, 04/04/2012 - 21:04 | 2318133 Seer
Seer's picture

I heard that she was HOT!

Wed, 04/04/2012 - 21:29 | 2318191 Marginal Call
Marginal Call's picture

But Jules has a bad motherfucker wallet.

Wed, 04/04/2012 - 20:05 | 2318018 Schmuck Raker
Schmuck Raker's picture

How about "Freedom Thermal Units"?

Call your Congressman.

Wed, 04/04/2012 - 21:06 | 2318138 Seer
Seer's picture

"Call your Congressman."

Don't call Walter Jones!  He's totally reformed from his foray into this pot.

Wed, 04/04/2012 - 17:43 | 2317701 Centurion9.41
Centurion9.41's picture

"a rate that is simply no longer possible."

Really?   Another proclimation about impossibility.  It was impossible that there was more oil/gas [peak oil BS], now it's impossible for production to ramp up.  Utter BS.

Production rates could ramp up.  It would take a lot of investment and directed energy, much like the space program.  But it could be done.

All these self serving pundits who make a living off of selling proclimations to pea brained Sheeple is tiresome.

Wed, 04/04/2012 - 19:00 | 2317887 blu
blu's picture

There was a time when oil would literally gush from the ground. Now in many of these new plays it has to be forced from the ground using chemicals, hydralics and heat.

Yes you could plow more energy at it and get it out all the faster. You could even consume more energy at getting oil out of the ground than the oil itself would provide, leading to a net loss. Actually I'm pretty sure they will do that because the visuals would be so important politically (I'm sure you agree).

The Saudis are using sea water to force some of their dying wells. In places they pump more salt water out of the ground by an order of magnitude than oil, but it still pays at $104/barrel.

Someday it will not pay anymore. They'll close shop and go live in their high-rises in Brazil.

The story about peak oil is not that one could never get more oil. The story is that you eventually kill yourself trying to keep up the illusion of abundance. It's an interesting story. It is a story about human nature. But there can be no happy ending.

Wed, 04/04/2012 - 19:15 | 2317912 Seer
Seer's picture

Here's an easy logic test for the logic-impaired:

Before you is ONE glass of water.  That water should last forever (well, let's pretend that evaporation doesn't happen).  Only problem is, YOU CANNOT DRINK IT!  Oh, you say you want to DRINK it?  Well, if you have a fixed quantity the ONLY way that you can state how LONG it will last is to state what your RATE OF CONSUMPTION is!  If you suck out all the oil and CONSUME it NOW you cannot consume it tomorrow, now can you?

All you cornucopians, just because someone can make a profit off of something that is negative to YOU it doesn't make the physics and logic of what they are doing false.  If you get injured from being pushed down it doesn't mean that your "enemies" are falsifying claims of gravity!  "Enemies" in this case would be anyone warning you that there's a limit to physical resources, perhaps you label them 'environmentalists" or some such (it's a convenient way for you to hide behind the deception of your insecurities due to being overly dependent upon something, and that's someone else's fault/concern, why?).

Anything PHYSICAL (oil) that is contained within another PHYSICAL thing (the planet earth) DOES have a finite measure!

Lastly, yes, if you take everyone away from doing EVERYTHING that they are currently doing and commit EVERYONE to extracting oil you'll be sure to extract a LOT more oil, but only up to a point, a point where people start to die of starvation because, well, because no one is farming, you've got everyone (all the energy) directed at extracting oil!  Oh, silly me, we wouldn't have PEOPLE doing this (we're not hip on "illegals"), really, no, we'd have MACHINES do it you say?  Fine, that would be a redirection of stuff like iron-ore to produce oil extraction equipment from building things like tractors, which would, well, mean people would die of starvation.  You're like that liberal retard that I tried to get across the point that not EVERYONE could have free school because what if everyone was IN school, who would produce our food?  Sorry, at some point THERE IS A THRESHOLD; only the cornucopians believe otherwise.

Wed, 04/04/2012 - 21:14 | 2318160 Seer
Seer's picture

Enemies of the state...

Oh, learned something new! :-)  From the comments:

"Did you know that if you? rearrange the letters in "Spiro Agnew," you get "grow a penis"

Apparently this person was looking at the trees through the forest, didn't see that Agnew was just one big walking prick.  But yeah, probably, anatomicals...

Wed, 04/04/2012 - 21:24 | 2318183 Seer
Seer's picture

Oh, and here's one for You :-)

http://www.youtube.com/watch?v=_hVCMXFQfhA&feature=related

Lyrics on the album version uses "country" and "farmer" :-) 

Wed, 04/04/2012 - 22:37 | 2318322 disabledvet
disabledvet's picture

know what's scary? I can RELATE to you, bro.http://www.youtube.com/watch?v=I1wg1DNHbNU&feature=player_detailpage...b... at ya (and your island paradise...may you achieve it!)

Wed, 04/04/2012 - 17:46 | 2317710 TheGardener
TheGardener's picture

Very alluring article, clever people with good arguments,
but still reading tea leaves.

Still don`t see no compelling arguments (after the fact!)
for why prices rose being justified by supply and demand.

Just fiat money falling from grace, priced in oil.

Wed, 04/04/2012 - 19:18 | 2317920 Seer
Seer's picture

Apparently you're not capable of looking close enough.  Bad news: shortsighted vision means you'll be road kill.  Good news: it should happen pretty fast.

Hint: economies of scale in reverse

Wed, 04/04/2012 - 19:30 | 2317946 CrashisOptimistic
CrashisOptimistic's picture

I think you missed the point a bit.

Oil is not priced in dollars.  It's priced in BTUs.  It always has been.  Dollars or gold ounces or euros are just a translation.

The real price is BTUs required to get BTUs out.  That number is getting worse.  The dollar stuff is just side effects.

 

Wed, 04/04/2012 - 20:18 | 2318042 TheGardener
TheGardener's picture

Got you and appreciate your reply. Could still be a close miss, because expenses (to get the stuff out) rise to meet
income (seemingly inflated prices).

Watch solar. Without the hype and the subsidies the new floor for profitability could be back to 35% of current
valuations.

Wed, 04/04/2012 - 17:54 | 2317727 caconhma
caconhma's picture

The world's major central banks -- including the Bank of Japan (BOJ), the European Central Bank (ECB), and the Federal Reserve -- appear to have finally won a major battle in the deflationary war that broke out five years ago in 2007." WOW. Holly Shit!

 

By printing lots of fiat money Central banks saved and rewarded the most incompetent, fraudulent, lawless financial institutions and their executives at expense of

  • Viable and successful financial institutions
  • People living at a fixed-income
  • The society as a whole by legalizing & promoting fraud, theft, corruption as well as destroying whatever left of the free-market economy

It appears that this Central Banks victory over the deflation has severely poisoned the worldwide economies leading to major geopolitical confrontations to come.

Wed, 04/04/2012 - 18:08 | 2317759 TheGardener
TheGardener's picture

Why should I concern myself with the price of a single gallon if I never ever filled up with just ONE gallon ? I don`t trade the price of a gallon either, so why give a heck ?

If the price of fuel goes up so much as to affect me - than less driving, like dumping out of town mistresses. Good news, so I can afford an even bigger car with less mileage because I will drive less and appreciate
it all the more for it !

Wed, 04/04/2012 - 19:20 | 2317924 Seer
Seer's picture

Now then, you've gone and dont it!  You've proved that you're an idiot!

Wed, 04/04/2012 - 19:32 | 2317950 TheGardener
TheGardener's picture

Well, seer, you could be right that I`m an idiot and my
logic is impaired . By your and conventional logic.

Wed, 04/04/2012 - 18:19 | 2317792 MrPook
MrPook's picture

I'm a middle aged well educated man and I've been trading for years. 

So what the fuck is a BTU? I've never heard of it before and wikipedia is giving me "British Thermal Units".

Thank you

Wed, 04/04/2012 - 18:43 | 2317847 blu
blu's picture

Yes, that's what it is. BTU is how all energy sources are measured for energy output. It's a way to talk about energy as a whole and not just about oil as a thing, which is not the only energy source in play.

Wed, 04/04/2012 - 19:33 | 2317954 CrashisOptimistic
CrashisOptimistic's picture

Sorry guys, it is the only energy source that matters.

Oil is transportation.  This is not about trading.  Trading isn't going to be relevant rather soon.  This is about dying, not trading.

Oil is transport.  The other stuff like windmills, solar power and whatever . . . every one of those will have equipment failure and without transport, it won't get repaired.

Nothing matters but oil.  That's just the way it is.

Wed, 04/04/2012 - 19:44 | 2317972 MrPook
MrPook's picture

thank u blu

Wed, 04/04/2012 - 19:44 | 2317973 MrPook
MrPook's picture

thank u blu

Wed, 04/04/2012 - 18:54 | 2317874 CrazyCooter
CrazyCooter's picture

BTU is exactly that; british thermal units. Essentially, the author uses this word to describe energy, specifically heat, as a commodity that everyone will compete for in any available means. Oil is valuable because its very dense BTUs, but it is not the only source of BTUs.

Regards,

Cooter

Wed, 04/04/2012 - 19:28 | 2317941 Seer
Seer's picture

LOL!  Apparently people missed this subtle(?) sarcasm.

The "dumb American" caricature.  It's like the traveling American who, when his question to a local shop owner was returned in a foreign tongue (didn't speak English!), would restate his question LOUDER! (this was actually observed by some colleagues and recounted to me).

Wed, 04/04/2012 - 18:28 | 2317807 americanspirit
americanspirit's picture

Oil at $85/barrel in 30 years? And what will those $ be worth in 2042? Or are we talking oil at 85 2012 $? And will oil be priced in $ in 2042? Any bets?

Wed, 04/04/2012 - 18:49 | 2317864 blu
blu's picture

There was a time when oil was not worth a penny.

Nobody needed it, or knew what it was, and would not pay for it.

Right now of course we can hardly imagine such a time ever existed. But in fact, that time was most of human history.

There may be a time someday in the future when the exact same situation could prevail again. We will have moved on. Probably oil will never have $0 value because it can be used for things besides transportation. But if humanity ever abandons modern chemistry (I can easily imagine that happening actually) then indeed oil might have $0 value again ... in current or future fiat.

Coal is perhaps a different story.

Wed, 04/04/2012 - 21:36 | 2318206 Marginal Call
Marginal Call's picture

Oil will retain some value even in a more primative culture.  We  were soaking stuff in it and launching it alit over castle walls long before a combustion engine.

Wed, 04/04/2012 - 18:50 | 2317865 THE DORK OF CORK
THE DORK OF CORK's picture

Something is happening in the UK.

http://www.riagb.org.uk/images/news_documents/1311241760.pdf

Go to national trends yearbook for greater detail.

Wed, 04/04/2012 - 19:44 | 2317974 lasvegaspersona
lasvegaspersona's picture

Are we pretending the dollar will last long enough to ever see $85/b again?

Wed, 04/04/2012 - 20:10 | 2318030 Diamond Jim
Diamond Jim's picture

Thorium Power, bitchez............

Thu, 04/05/2012 - 01:22 | 2318629 MeelionDollerBogus
MeelionDollerBogus's picture

yup. Thorium & trains for mass-transit of land-cargo & in place of highways, fuel-cells & solar cells for small electronics, bloombox & natural gas + micro-hydropower for mid-level & I'd say ... give a thought to horses vs cars. Seriously. Just a thought, depending on the environment one lives in (not the big city). For the rest, leased cars & taxis may be more energy efficient (who knows yet about dollar cost for the next 50 years/cash of some fiat / gold / silver value) vs ownership / single-use of cars. We'll just have to see what the market wants then.

Wed, 04/04/2012 - 21:36 | 2318204 Seer
Seer's picture

Oil consumption can be drastically cut and we'd still live.  Drastic cuts in electricity is another matter (look for an article on states that can produce a lot of electricity).  But, if only the "rich" states have oil then how can they STAY rich if there's no one to export to?

Wed, 04/04/2012 - 21:43 | 2318217 Marginal Call
Marginal Call's picture

The oil for food trade/sanction play in reverse.   Because when you get down to what nations have to barter AP (after paper), we've got more food and water than mouths, the Middle East has more oil than mouths.  And Chindia has too many mouths.

Thu, 04/05/2012 - 13:35 | 2319936 earleflorida
earleflorida's picture

it's all demographics. some states are rich in water ie. hydroelectric dams, and yet others are so isolated they're prime candidates for 'thorium nuclear plants' [?] --- transmission of energy is a thing of the future,... as is the evolution of cloud computing via wireless transmission, cutting out the duplicity and unnecessary complexities. 

Thu, 04/05/2012 - 14:34 | 2320051 Technical Bard
Technical Bard's picture

Canadian oil sands and deep water offshore economics require high oil prices, largely due to the enormous capital costs to build (costs of steel, copper, labour, risks) Recent major projects require oil prices nearing $100 to break even, let alone be a good investment.  Reductions in price due to demand destruction will delay capital investment, leaving us with a cyclical oil price because it takes 5-8 years to bring new production on stream.

Fri, 04/06/2012 - 19:07 | 2323582 bart.naf
bart.naf's picture

Energy costs per million BTUs, since 1976.

 

 

http://www.nowandfutures.com/images/energy_per_btu.png

Do NOT follow this link or you will be banned from the site!