Peak Oil is You

Donate Bitcoins ;-) or Paypal :-)

Page added on March 14, 2018

Bookmark and Share

Our Latest Oil Predicament


It is impossible to tell the whole oil story, but perhaps I can offer a few insights regarding where we are today.

[1] We already seem to be back to the falling oil prices and refilling storage tanks scenario.

US crude oil stocks hit their low point on January 19, 2018 and have started to rise again. The amount of crude oil fill has averaged about 365,000 barrels per day since then. At the same time, prices of both Brent and WTI oil have fallen from their high points.

Figure 1. Average weekly spot Brent oil prices from EIA website, with circle pointing to recent downtick in prices.

Many people believe that the oil problem, when it hits, will be running out of oil. People with such a belief interpret a glut of oil to mean that we are still very far from any limit.

[2] An alternative story to running out of oil is that the economy is a self-organized system, operating under the laws of physics. With this story, too little demand for oil is as likely an outcome as a shortage of oil.

Oil and energy products are used to create everything, even jobs. If all humans have is energy from the sun, plus the energy that all animals have, then humans would be much more like chimpanzees. All humans would be able to do is gather plant food and catch a few easy-to-catch animals (earthworms and crickets, for example). They certainly could not extract oil or find uses for it.

It takes a self-organized economy to support the extraction and sale of energy products. We need a complex web that includes:

  • Equipment to extract the oil
  • Training for engineers and other workers
  • Devices that use oil, such as vehicles, farm equipment, road paving equipment
  • A financial system to enable transactions to purchase oil
  • Buyers with jobs that pay well enough that they can afford to buy goods made with oil

The things that go wrong can with this economy can be on the buyers’ end of the economy. Buyers can have jobs, but these jobs may not pay well enough for the buyers to afford the output of the economy. A falling share of the population may be able to afford cars, for example.

[3] It is possible that a recent rapid increase in oil supply is contributing to the current mismatch between supply and demand. 

Data of the US Energy Information Administration indicates that US oil supply has recently begun to surge. It is not just crude oil production that is higher. Natural gas liquid production is higher as well. As a result, Total Liquids production is reported to have been more than 16 million barrels per day in November 2017.

Figure 2. US Liquids Production, based on International Energy Data provided by the US EIA.

Oil production of the rest of the world has been relatively flat, as planned.

Figure 3. World excluding the US oil production by type, based on EIA International Energy data through November 2017.

Total world production, combining the amounts on Figures 2 and 3, set a new record of 99.1 million barrels of oil per day for November 2017, based on EIA data. This level is above the November 2016 level, which was the previous record at 98.9 million barrels per day.

At this high level of production, it is not surprising that the economy cannot absorb the full amount of extra supply.

There are also a number of issues that affect buyers’ demand for oil.

[4] The percentage of US residents who can afford to buy a new automobile or light truck seems to be falling over time. 

If we look at the number of autos and trucks sold in the US, per 1000 population, we see a pattern of falling humps, as a smaller and smaller share of the population can afford a new car or light truck, each year. The big drops occur during the gray recessionary periods marked on the chart.

Figure 4. Figure showing US Passenger Cars and Light Trucks Purchased per Year per 1000 Population. Original graph by FRED (Federal Reserve of St. Louis). Retitled by author, because units were confusing on original chart.

The first peak came in 1978, at 67.3 units. The second, slightly lower peak came in 1986, at 66.7. The third peak came in 2000 at 61.5 units. The fourth peak came in 2015, at 51.6 units. Early 2018 amounts suggest that the trend in units sold per 1000 population will continue its downward trend.

Part of what is happening is that vehicles are becoming longer-lasting, so that there is not as much need to buy new cars frequently. But having a short-lived, cheap car has an advantage, if it makes cars available to a larger percentage of the total population. With a vehicle, a person has a much better ability to participate in the US workforce. US Labor Force Participation Rates peaked in about the year 2000, which is about the time of the third peak in affordability.

Figure 5. US Labor Force Participation Rate. Chart by FRED (Federal Reserve of St. Louis).

[5] There was a steep rise in the cost of auto ownership in the 1995- 2008 period. This has since fallen back, but the cost is still high relative to the wages of many workers.

One estimate of the cost of auto ownership is the reimbursement rate that the US government allows businesses to pay workers who use their own cars for company business.

Figure 6. Auto reimbursement rates as compiled on this list. Amounts shown on “As Stated” basis, and also at the 2017 cost level, based on CPI Urban.

These costs peaked about 2008 and were reflected in high reimbursement rates for 2009 as well. More recently, buyers of cars have been helped by longer term loans and ultra-low interest rates. If interest rates rise at all, the share of people buying or leasing new vehicles can be expected to fall further from the level shown on Figure 4.

[6] Building homes also requires oil. There has been a sharp drop in US home building, both on an absolute basis, and on a per capita basis, since 2008.

Figure 7. US Housing Units Completed, related to US population. Population from Census Bureau; population from UN 2017 population summary.

Building homes is part of oil demand. It takes oil to transport all of the materials used (lumber, siding, wiring, pipes, appliances) to the place where the house will be built. Furthermore, many of the materials used in building a home are produced using petroleum products.

The number of homes built depends on the number of new households that can afford a separate place to live. The low level of building makes it look as if the economy is still seeing a pattern of young adults living with their parents much longer than in the past. If buildings are to be replaced every 75 years, my calculation suggests that about 6 housing units per 1000 residents need to be built each year. About 2.5 units per thousand are needed, just to keep up with rising population, if upgrading and remodeling can be done almost indefinitely.

The fact that there is little home building reduces the number of jobs available in the building industry. The lack of jobs in this industry helps hold down the demand for oil, because these workers would use their wages to buy goods for themselves, such as food and vehicles. Food is grown and transported using vehicles powered by oil.

The lack of home building also contributes to the nation’s homelessness problem. If there were plenty of inexpensive apartments, there would be fewer homeless people.

[7] There is no longer an oil price at which both oil exporters and oil importers are satisfied. Oil prices today are too low for oil exporters.

I started writing about oil producers complaining that oil prices were too low in early 2014. At that time, oil companies were looking back at prices of over $100 per barrel in 2013. They were saying that $100+ prices were too low to provide adequate funds for reinvestment in new fields. Now prices are in the $65 range, which is even farther below the desired level.

Oil exporters are especially unhappy about today’s low prices, because they need high prices in order to collect needed tax revenue. This is why OPEC members and Russia have been holding back production. The plan is to deplete the glut of oil in storage, and thus get prices up.

It is not at all clear, however, that consumers in oil importing countries can really withstand higher prices. The fact that Brent oil prices could only stay above $70 per barrel for one week on Figure 2 (in the red circle), suggests that consumers in major oil importing countries cannot really withstand oil prices at this high level. I have observed previously that a sustainable price, without adding a huge amount of debt each year, is only about $20 per barrel.

[8] If we analyze vehicle purchases by country, we can see that low oil prices since 2014 seem to be helping major oil importers but are hurting Tier 2 countries that are commodity-dependent.

Figure 8. New vehicles (private passenger and commercial combined) purchased per capita for selected groupings of countries. Amounts shown are from OICA estimates by country.

In this chart, the grouping of Advanced Economies includes:

  • USA
  • Europe
  • Japan
  • Canada
  • Australia

For this grouping, growth in auto sales is again rising, but has not regained its prior level. This is somewhat similar to the indications in Figure 4, for the US only, looking at cars and light trucks. The main difference is in the last two years. Changes in currency relativities may be helping recent vehicle sales for the other countries in the grouping.

On this chart, the Tier 2 grouping includes:

  • Brazil
  • Russia
  • South Africa
  • South Korea
  • Malaysia
  • Mexico

This group includes several oil and other resource dependent countries. South Korea is perhaps more like the industrial countries in the first grouping. This grouping shows a downturn in the purchasing of vehicles in the last three years, when commodity prices have been depressed. If oil prices were higher, this group would probably be buying more vehicles.

Figure 8 shows that China’s auto sales have been growing rapidly. In fact, China has surpassed the Tier 2 average in per capita sales. In the past year, China’s growth in auto sales has flattened. But with China’s huge population, the absolute number of vehicles sold is still very high: 29.1 million vehicles, compared to 17.6 million for the United States, and compared to 20.9 million for Europe.

India and the Rest of the World account for surprisingly few vehicles sold. On Figure 8, their lines overlap at the bottom of the chart.

[9] The push toward raising interest rates and selling QE securities will tend to reduce oil prices and add to the oil glut.

I wrote about some of the issues involved in Raising Interest Rates Is Like Starting a Fission Chain Reaction. When interest rates are higher, economies are pushed in the direction of recession. All kinds of discretionary spending are reduced. Use of oil will almost certainly be reduced. This could lower oil prices significantly, as it did in 2008 (Figure 1).

[10] To a significant extent, China has been helping hold up world oil consumption, with its rapidly growing economy. It is hitting headwinds now, however.

The International Monetary Fund recently showed an exhibit indicating how China’s debt is growing very rapidly, but its growth in output is slowing. The combination could very easily lead to a credit crisis.

Figure 9. Exhibit from IMF Working Paper called Credit Booms: Is China Different?

Now, the rest of the world depends on China for many imported goods. If China should have problems, it would indirectly affect oil demand elsewhere as well.

Even China’s recent ban on importing certain types of materials for recycling can be expected to have an adverse impact on oil demand. Very often, if a container is sent from China to the US or to Europe, there will be no exported goods to send back to China, except for material for recycling. If China refuses to take recycling, containers will need to be returned empty.

Recycling generally needs to be subsidized. Part of what this subsidy is used for is to pay the cost of shipping material to be recycled to China. If China does not take the recycling, this payment for shipping materials in the otherwise-empty containers will not be made. The shipping company will need to charge exporters more for the one-way trip, if the shipping company is to be profitable. This higher cost, by itself, is a deterrent to trade. In many ways, the higher shipping cost is like a tariff.

[11] Conclusion.

My expectation is that the general direction of oil prices is likely downward, especially if interest rates rise. A major financial disruption of any kind would have a similar effect. Gluts of oil can be expected with lower prices.

Many groups, including the IEA, have been warning about oil shortages because of inadequate investment in new production. Oil shortages, and energy shortages in general, have a multitude of adverse impacts on economies. One of them is loss of jobs, because jobs require the use of energy, for example, to deliver goods in a truck. If many more people are unemployed, there is less demand for oil.

Thus, it is not at all clear that a shortage of oil leads to high prices; it may very well lead to lower prices. Many people are confused about this issue, because the world demand gives a misleading impression of the mechanism involved. Lack of demand comes from part of the population not being able to afford cars and homes. It also comes from cutbacks in government spending and from failing businesses. In an interconnected system, even failing banks tend to reduce oil demand.

Another adverse impact of oil and energy shortages tends to be fighting and wars. The fact that the US seems to be raising its energy production, in apparent disregard for countries that have been trying to cut back, is likely to make some oil exporting countries quite angry. It could sow the seeds for another war.

Economists do not seem to understand that GDP growth rates don’t tell very much about the well-being of individual citizens in an economy. A major issue is wage disparity. If there are many very low wage people, there is likely to be downward pressure on the sale of automobiles, and on the purchase of petroleum products. Economists are likely to think everything is fine, up until a major crisis occurs.

our finite world

42 Comments on "Our Latest Oil Predicament"

  1. MASTERMIND on Wed, 14th Mar 2018 9:06 am 

    Oil discoveries in 2017 hit all-time low –Houston Chronicle

    IEA Chief warns of world oil shortages by 2020 as discoveries fall to record lows

    Saudi Arabia’s Energy Minister Warns of World Oil Shortages Ahead

    Saudi Aramco CEO sees oil supply shortage coming as investments, discoveries drop

    UAE warns of world oil shortages ahead by 2020 due to industry spending cuts

    Halliburton CEO says oil will spike due to oil shortages by 2020 after Industry Cuts

    2020s To Be A Decade of Disorder For Oil

    North Dakota Department of Mineral Resources Director “We could have worldwide oil crisis by 2021”

  2. bobinget on Wed, 14th Mar 2018 9:08 am 

    LOWER DEMAND? Horse pucky.
    It’s 7:08 on The left coast. Be back @ 7:40 with an all important EIA repore showing demand is holding up just fine.

  3. alain le gargasson on Wed, 14th Mar 2018 9:28 am 

    explanation about energy

  4. bobinget on Wed, 14th Mar 2018 9:33 am 

    Summary of Weekly Petroleum Data for the Week Ending March 9, 2018
    U.S. crude oil refinery inputs averaged 16.4 million barrels per day during the week
    ending March 9, 2018, 432,000 barrels per day more than the previous week’s average.
    Refineries operated at 90.0% of their operable capacity last week. Gasoline production
    increased last week, averaging 10.3 million barrels per day. Distillate fuel production
    decreased last week, averaging 4.5 million barrels per day.
    U.S. crude oil imports averaged 7.6 million barrels per day last week, down by 418,000
    barrels per day from the previous week. Over the last four weeks, crude oil imports
    averaged about 7.5 million barrels per day, 1.8% less than the same four-week period last
    year. Total motor gasoline imports (including both finished gasoline and gasoline
    blending components) last week averaged 604,000 barrels per day. Distillate fuel imports
    averaged 223,000 barrels per day last week.
    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum
    Reserve) increased by 5.0 million barrels from the previous week. At 430.9 million
    barrels, U.S. crude oil inventories are in the lower half of the average range for this time
    of year. Total motor gasoline inventories decreased by 6.3 million barrels last week, and
    are in the upper half of the average range. Finished gasoline and blending components
    inventories both decreased last week. Distillate fuel inventories decreased by 4.4 million
    barrels last week and are in the lower half of the average range for this time of year.
    Propane/propylene inventories decreased by 2.3 million barrels last week, and are in the
    lower half of the average range. Total commercial petroleum inventories decreased last


    Total products supplied over the last four-week period averaged 20.4 million barrels per
    day, up by 3.2% from the same period last year. Over the last four weeks, motor gasoline
    product supplied averaged 9.2 million barrels per day, up by 2.5% from the same period
    last year. Distillate fuel product supplied averaged 4.0 million barrels per day over the
    last four weeks, down by 4.2% from the same period last year. Jet fuel product supplied
    is up 11.2% compared to the same four-week period last year..

    Note that double digit jet fuel increase.
    Jet fuel, an important economic indicator.

  5. bobinget on Wed, 14th Mar 2018 9:41 am 

    This paragraph for MasterMind;

    U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum
    Reserve) increased by 5.0 million barrels from the previous week. At 430.9 million
    barrels, U.S. crude oil inventories are in the lower half of the average range for this time
    of year. Total motor gasoline inventories decreased by 6.3 million barrels last week, and
    are in the upper half of the average range. Finished gasoline and blending components
    inventories both decreased last week. Distillate fuel inventories decreased by 4.4 million
    barrels last week and are in the lower half of the average range for this time of year.
    Propane/propylene inventories decreased by 2.3 million barrels last week, and are in the
    lower half of the average range. Total commercial petroleum inventories decreased last
    week. (30)

    Now, that 5 Million B inventory number is the ONLY one traders look at right ff the bat.

    Because export numbers are not included in this Wednesday morning report 5 M B is almost meaningless by itself. The remainder if the paragraph tells the tale.

  6. fmr-paultard on Wed, 14th Mar 2018 9:55 am 

    bob i’m a libtard, i just want to say hi

  7. bobinget on Wed, 14th Mar 2018 9:57 am 

    About that demand. This month marks the beginning of what is known as the ‘shoulder season’. A time for massive builds in prep for
    spring driving season. A third Norwester is currently hitting New England. This should have
    cut into gasoline demand, it did not.

    EIA Weekly Report – This is a first: the EIA is too embarrassed to finish a sentence!!!

    “Total commercial petroleum inventories decreased last week.” 8 million barrels net (5.0-6.3-4.4-2.3)

    So, Oil is NOT falling off the cliff due to lack od demand.
    I rest my case.

  8. twocats on Wed, 14th Mar 2018 10:08 am 

    bobinget – perfectly explained.

    the fact that gail is leading with the 365k inventory increase without noting that increases are common this time of year building towards maintenance and summer driving is either incompetence or intended to deceive. clearly she has an agenda.

    bobinget’s comments should be the actual post not gail’s.

  9. bobinget on Wed, 14th Mar 2018 10:57 am 

    Thanks twocats,(three cats are my absolute limit)

    Here’s the open secret.
    Most “surplus” is coming from Permian.
    Some weeks exports take (as much as) 2 million barrels. Last week, exports flagged a bit.
    (this week, better)
    As ‘hot’ as Permian is, world demand is hotter.
    Supply limited by Both politics, and I suspect,
    serious depletion. KSA Will Not Raise Quotas….
    Except; India and Pakistan. (consumption in India is going nuts, off the charts)

    Traders in NYC and London NEED chaos.
    In an orderly market they would go broke.

    As if this were not enough, 3/26 China opens
    crude trading in Yuan.

  10. fmr-paultard on Wed, 14th Mar 2018 11:06 am 

    cats are retarded. they smell like pot smokers. why does supertard attack people indiscriminately? very odd.
    unless this is a new strategy that the govermnet uses.
    the b*tch who is non jewish indiscriminately highlight the reminder that i need to register my dog and my car. she doesn’t know i have a dog.

    we have compliant people and if she increases dog registration she gets more money. that’s how govt works.

  11. bobinget on Wed, 14th Mar 2018 11:11 am 

    Tweets & replies Media


    3h3 hours ago
    #Egypt’s oil output is slumping. Net imports are set to rise strongly with refinery upgrades also struggling to keep up with demand. See latest @MeesEnergy #OOTT

  12. bobinget on Wed, 14th Mar 2018 11:21 am 

    China output falls to old low, imports rise;–finance.html

    Believe me, there’s gonna be trouble in River City.
    Run-away oil prices will panic Joe & Jane Trump Voter.

  13. asg70 on Wed, 14th Mar 2018 11:43 am 

    “it is not at all clear that a shortage of oil leads to high prices; it may very well lead to lower prices.”

    Gail is throwing darts again.

  14. MASTERMIND on Wed, 14th Mar 2018 11:47 am 


    I agree. I have no idea how she thinks a shortage will lead to lower prices. That doesn’t make any sense. When there was a shortage back in the 1970 the price doubled.

  15. GregT on Wed, 14th Mar 2018 12:06 pm 

    “I agree. I have no idea how she thinks a shortage will lead to lower prices.”

    Come on MM, even somebody of your intellectual capacity should be able to stumble his way through that one.

  16. Antius on Wed, 14th Mar 2018 12:49 pm 

    “I agree. I have no idea how she thinks a shortage will lead to lower prices. That doesn’t make any sense. When there was a shortage back in the 1970 the price doubled.”

    Because we burn oil to produce economic activity – i.e. to do work. If the price of oil is higher than the value of the economic activity it produces, then it isn’t affordable. You can absorb the extra cost for a little while by taking on more debt, but debt levels are already high. Rising inequality and falling real incomes also reduces the maximum supportable price for oil. As people at the bottom can no longer afford to purchase goods and services made with oil, demand falls. This tends to moderate the price. Because oil is not a substitutable resource (at least at present) and because energy is needed to support all economic activity, a decline in availability can have unpredictable results when it comes to price.

    Our problem is not declining oil reserves. It is declining low-cost, high-EROI oil reserves. Expensive oil isn’t very useful.

  17. MASTERMIND on Wed, 14th Mar 2018 12:58 pm 

    Trump’s pick for National Economic Council is a CNBC host who gives bad financial advice

    Kudlow does not have either a graduate or undergraduate degree in economics and has not written scholarly papers on the subject.

    Kudlow argued in 2002 that invading Iraq would create an economic boom in the United States.

    In December 2007, while the Great Recession was beginning, Kudlow insisted “there ain’t no recession” and the “Bush boom continues.” Kudlow wrote, “There’s no recession coming. The pessimistas were wrong. It’s not going to happen. At a bare minimum, we are looking at Goldilocks 2.0.”

    In July 2008, seven months into the recession, Kudlow was still arguing that there was no recession or housing crisis, arguing that America was “in a mental recession, not an actual recession.”

    In September 2008, Kudlow argued that lower oil prices would “make it much easier for people to pay their mortgages on time,” thus abating the growing credit crisis.

    Kudlow said that he was “grateful” that the “human toll” from the Fukushima nuclear disaster was worse than the “economic toll.” He later apologized.

    In a rant about President Barack Obama’s first 100 days, Kudlow accused the former president of declaring “war against investors, businesses, and entrepreneurs,” and “replacing the rule of law” with “political decisions.”

    Kudlow called the “higher income inequality” of the modern era a “falsehood” and denounced Obama’s “tired, banal, and boring” policy focus on the issue.

    Kudlow argued that the country began stress tests on banks in 2009 because the Obama administration needed a villain.

    Kudlow suggested Trump’s “protectionist” trade policies could cause an economic depression but endorsed Trump anyway.

  18. Cloggie on Wed, 14th Mar 2018 1:14 pm 

    Talking about “oil predicament”, that broad May, who can’t even protect her own population and children in particular against Islamic gangsters, now wants to total isolate Russia over that “nerve gas scandal”:

    Picture this: some Russian defector apparently got hit. That’s what traitors can expect. Why do you think Edward Snowden is still residing in Moscow? And now she wants to isolate Russia?!

    This is obviously done in concert with the US (deep state), although Trump, who was almost banned from the UK, has stated that he is behind Britain, probably to ease the tension at home.

    There is absolutely no certainty that Russia did it. And why nerve gas? Why not a contract hit with a motor cycle and a gun? The West is known to be a master in false flags, 9/11, the “election meddling baloney” and probably MH17. The US is constantly agitating for conflict with Russia, that resists becoming a forced member of the empire, just like Germany did until 1945.

    If the US wants to have a final go at world ownership, it must do it now. China is growing, Russia stabilizing, Europe is quietly sneaking out of the West towards more independence and the US is becoming weaker and weaker in the face of becoming a third world country.

    Interesting times.

  19. Cloggie on Wed, 14th Mar 2018 1:17 pm 

    Kudlow does not have either a graduate or undergraduate degree in economics and has not written scholarly papers on the subject.

    I thought millimind that these tribal members all had such a high IQs.

    Again deeply disappointed.

  20. Norman Pagett on Wed, 14th Mar 2018 2:27 pm 

    the oil problem we face is really very simple and easy to understand—that is perhaps where the difficulty lies—it is just so simple, when seen by minds searching for and expecting complexity

    we built our modern industrial infrastructure on coal oil and gas—everybody knows that

    but what everybody refuses to acknowledge, is that it was CHEAP SURPLUS oil coal and gas

    We still have lots of oil, yes, but it costs a lot more to get hold of than it did 70 years ago

    back then, it took the energy in 1 barrel of oil to produce 100 barrels of oil—it was that ‘difference’ that built our current version of civilisation

    right now, the best oilwells deliver only a 20:1 return

    What this means is that we are getting only one fifth of the oil, for the same effort–or put it another way–oil costs five times as much in real terms.

    So, no matter how much oil we extract, fewer and fewer people can afford to buy it, therefore we get a glut of unaffordable oil.—and few can understand why there’s a glut of the stuff

    which will go on pricing itself out of its own market until there is no oil left at all, above ground

    But that cant happen, surely.

    I’m afraid it can

    oilwells return, at best 20:1 now, (usually Saudi wells)and that return is dropping year on year, so we must approach the point of 1:1–ie extractive effort equals energy delivered.

    At that point, oil will stay in the ground, irrespective of any price paid for it, because extraction will be a negative energy sum

    Forget oil shales and self sufficiency, at 6:1 those wells already non viable, and sustained by the legacy-energy of older more productive wells.

    The book The End of More (Amazon) explains it in more detail

  21. MASTERMIND on Wed, 14th Mar 2018 2:36 pm 


    It won’t be interesting times for Vlad the Bad! He is going down hard..Don’t make us George Bush this button..Over nothing!

  22. MASTERMIND on Wed, 14th Mar 2018 2:45 pm 

    North Dakota Department of Mineral Resources Director “We could have worldwide oil crisis by 2021”

    Look like your plans clogg are going to disappear and collapse! Nazi scum!

  23. MASTERMIND on Wed, 14th Mar 2018 3:07 pm 

    If Trump starts WW3 will his sons get to dodge the draft too?

  24. MASTERMIND on Wed, 14th Mar 2018 4:00 pm 

    Theresa May plans for ‘economic war’ with Vladimir Putin and his allies

    Sup now Clog! looks like our boys in the UK got our back! Putin will be compromised!

  25. MASTERMIND on Wed, 14th Mar 2018 4:11 pm 

    More than 500 migrants reach Greece in four days

    Now go your free and make sure to multiply! LOL haha Clogg!

  26. Cloggie on Wed, 14th Mar 2018 4:13 pm 

    What this means is that we are getting only one fifth of the oil, for the same effort–or put it another way–oil costs five times as much in real terms


    EROI 100 means that you need 1 barrel to obtain 100 barrel.

    EROI 20 means you need 1 barrel to obtain 20 barrel, or 5 barrel to obtain 100 barrel.

    The energy share in the total cost of energy production increased therefor from 1 to 5%, whivh is peanuts. The idea that the cost of oil increased with a factor 5 is completely wrong.

    The truth is that a decline of EROI from 100 to 20 is IRRELEVANT. Perhaps dig up a math book for 16 year olds and let the meaning of the logarithmic function sink in.

  27. rockman on Wed, 14th Mar 2018 4:26 pm 

    “Most “surplus” is coming from Permian.” The word surplus is continually misused. The oil going into storage includes oil PURCHASED by speculators as an investment anticipating to sell at a higher price down the road.

    Here’s a good Internet research project for anyone who thinks they understand the dynamic: find the DOCUMENTATION quantifying how much oil in storage is owned by speculators. And that would include the refineries.

    Come on, it can’t be that difficult given how many are casually tossing around the term “surplus”, can it?

  28. MASTERMIND on Wed, 14th Mar 2018 4:33 pm 


    Here are two scholarly papers about EROEI..You dumb denier white trash idiot!

    Inside the new economic science of capitalism’s slow-burn energy collapse (Ahmed, 2017)

  29. Cloggie on Wed, 14th Mar 2018 4:40 pm 

    More than 500 migrants reach Greece in four days

    Uh no, Greek islands. And now what? These invaders are stuck. Between there and Germoney there are several countries and fences. No chance. What do you think Europeans are… Americans? ROFL.

    We have your tribe at our disposal to completely f* up America for us:

    Pump the country full with people who can’t read and turn it into a useless third world cuntry, turn whitey into a desperate pile of misery until they will begin to vomit on the idea of American exceptionalism and begin to yearn for continental Europeans and older, more experienced brothers, to bail them out. And we, with a vile Nazi grin on our faces…

    …will of course gladly fullfil this desire and will not only rollback 1945, but also to a certain extent, 1776.

    The 6th American century will be continental European…

    …and we will call you European-Americans “Amerikaner”, a name with a solid German ring about it, just like the Dutch in South-Afrika are called Afrikaner.

    And the American problem European civilization has will be solved.

  30. rockman on Wed, 14th Mar 2018 4:40 pm 

    Cloggie – “The truth is that a decline of EROI from 100 to 20 is IRRELEVANT.” Even more important: the 1 bbl used to find 100 bbls of oil in the “good ole days” is constantly REPEATED by folks who ZERO close documentations proving it was anything to that claim.

    So, Norman, are you just repeating that 1 bbl to find 100 bbls verbiage because you saw someone present the DOCUMENTATION or are you just repeating someone’s unsupported claim?

  31. MASTERMIND on Wed, 14th Mar 2018 4:56 pm 


    I just posted two scholarly papers about EROEI that document its whole history…Unlike you I actually cite evidence.

  32. Cloggie on Wed, 14th Mar 2018 5:15 pm 

    “Sup now Clog! looks like our boys in the UK got our back! Putin will be compromised“

    “your boys” is a correct description, millikike. You have your Anglos in a death-grip and you go for the kill, using the third world as a weapon against these hapless people, as you have admitted several times, as you gloated about the immanent demise of Anglo-whitey.

    We in continental Europe are “too fascist” to let that happen to us…

    …and perhaps Orwell was right and will Oceania (=Anglosphere=Judaic State) become reality, a horror scenario for whites and J-power cemented. The NSA and MI6 are ready to implement that horror-scenario:

    But perhaps the Gods in the High Heavens will have mercy with the Anglos and the separation from the Washington-NYC axis will succeed.

  33. MASTERMIND on Wed, 14th Mar 2018 5:47 pm 


    Is this the real reason you want a trump wall?

  34. Cloggie on Wed, 14th Mar 2018 6:14 pm 

    We’re winning:

    Cary your defeat as a man, millimind, although I’m almost sure you won’t.

  35. JuanP on Wed, 14th Mar 2018 6:27 pm 

    Minusculemind keeps proving his total lack of education and intelligence with every post he writes. The board’s copy and paste nut job will be sorely disappointed when President Putin gets reelected in a few days. The incredibly stupid, immature, and infantile inferiority complex of Americans towards Russia is truly hilarious. Russia is the BIGGEST country inthe world with the most advanced nuclear arsenal and the best missile defense system on the planet, but the Imaginary Neuron thinks that the decadent, decrepit USA can win a war against Russia. Can a human being get more delusional than Micromind? Me thinks not! LOL! I wonder if this retard can even wipe his own butt!

  36. Boat on Wed, 14th Mar 2018 7:12 pm 


    You just don’t get the fear in the US by the right. The brown tend to vote Dem giving the country to the left. The Jew the Soros wannabes is all a smoke screen for Trump’s increase in immigration.

  37. Boat on Wed, 14th Mar 2018 7:22 pm 

    Smoke screen #2 Trump promises a crackdown (Dem towns) on sanctuary cities. In the Red state of Texas how many businesses hire ileagle labor. Which is a criminal offense. Lol Let’s build a wall but protect our criminal business class.

  38. MASTERMIND on Wed, 14th Mar 2018 7:25 pm 


    Trump is nothing but a fat dough boy…he is turning the US into a laughing stock. And its obvious he has been compromised by Putin

  39. Bloomer on Wed, 14th Mar 2018 8:54 pm 

    Kudlow is a perfect example that economics is not science, it is a dog and pony show.

  40. deadly on Thu, 15th Mar 2018 4:58 am 

    Somebody should write an article about oil.
    Not that many websites out there that involve the subject of oil and what it does, how it is extracted from the earth, etc. Don’t see much about petroleum at all on the internet. lol

    Oil will remain a market, oil bought by a buyer and sold by a seller, until it ain’t there anymore, then the price will be zero.

    Since coal and oil are in abundant supplies, there will be a market. A market means consumption, somebody wants some coal and oil for darn good reasons.

    Especially oil, get more power with not a lot of oil, some exhaust, not really a problem when considering the advantages and convenience. Wouldn’t want to haul coal around in a hopper and a firebox to fuel a steam engine, better have the gauges working. Then you will have to empty the ashes and haul them away too. fuels from crude oil eliminates the pain of steam engine maintenance.

    Burn coal at power plants and generate electricity that way. It works!

    You gotta go electric, like Studebaker did circa 1900.

    The internal combustion engine won the race, oil was a thousand feet down inside the bowels of the earth and everybody knew by then what oil was all about.

    Changed everything.

    Gasoline and diesel are a better choices for fuels. Fill the tank, start the engine, run it and drive to your destination, no residue of any kind, just more CO2 formed from the fuel when burned. Gets you to where you are going.

    Oil is 100 percent organically based and is the greenest energy ever to exist.

    Coal could even be greener, since it formed during the Carboniferous Period. Some debate as to which is greener, oil or coal.

    That is why there are people willing to work to have a car to drive to a place to earn money to drive back home to their house and get a good night’s sleep.

    Greenest existence ever in the history of mankind, thanks to oil and coal, modern life.

    Then they all get up and do it again. There are whole books written about it all and those books fill libraries to the brim. Musicians write songs, philosophers wax philosophical, it just never stops.

    That is how it is done in the real world, and I am sure that is the way it is the world over.

    ICEs move the earth and oil fuels it all.

    Bacon keeps longer when packaged with plastic.

    Time for a resurgence of nuclear power used to generate electricity, zero emissions, steam clouds from the cooling towers will develop micro-climates and ecosystems will flourish.

    The wolves of Chernobyl are there regardless of the levels of radiation.

    Life goes on and life will go on after oil.

    Especially if nuclear can win the hearts and minds of the fools on this earthship.

    Electricity is the king of usable energy, you know.

    You don’t start your car to power a generator to produce electricity so you can have a light bulb in your floor lamp lit for 8 hours. It makes no sense and is prohibitive.

    Power plants and hydro do that.

    Civilization is at its peak and maintaining it is at a high cost these days.

    Another day, another 100,000,000 barrels of oil and God only knows how much coal.

    Makes for a better world.

  41. BobInget on Thu, 15th Mar 2018 2:27 pm 

    OFF Topic
    “PUTIN CONCERNED, Trump Even Dumber Then Thought”

    Now that Our Dear Leader has been forced to
    issue sanctions against Russians, Putin could very well release (some, not all) blackmailing material.

    Stay tuned, right after “60 Minutes” see Wikileaks.

  42. BobInget on Thu, 15th Mar 2018 2:36 pm 

    I for one am glad trump picked Kudlow, feared he might choose someone from TV -;)

    Whose next? Friday afternoon, “Night of the Long Knives”.

Leave a Reply

Your email address will not be published. Required fields are marked *