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The Soft Belly of The Oil Industry: the Upcoming Seneca Collapse

The Soft Belly of The Oil Industry: the Upcoming Seneca Collapse thumbnail
 
Ugo Bardi explains his idea of an impending “Seneca Collapse” of the world’s oil industry at the session on climate change of the meeting of the Club of Rome in Vienna, on 10 Nov 2017. What follows are not the exact words said, but it maintains the gist of this brief comment that was focused on the concept that the oil industry has a “soft belly” in the fact that it produces mainly fuel for engines used for transportation. If this market were reduced by the introduction of electric vehicles and other transportation innovations, the whole industry could collapse. That would be a good thing for the earth’s ecosystem and for humankind in general.
 
 
 
Dear colleagues, we are having an interesting discussion on how to stop climate change and I think I could add some thoughts of mine on the basis of my recent work that I published in the form of the book titled “The Seneca Effect“.
The problem we have been discussing is how to limit emissions and we saw that it needs to be done fast and even drastically if we want to avoid the worse effects of climate change. Obviously, it is not easy. (image from Skeptical Science)
Most of what has been said today is based on a “top-down” approach, which I may also describe as supply-limiting. That is, we are speaking of a carbon tax, of emission limits, and the like – measures that governments should take in order to limit the production of fossil fuels. I don’t have to tell you that it is an effort that has been ongoing for several years and yet emissions keep growing. It doesn’t seem to work
So,  can we take the opposite approach? That is, look at the demand side in a “bottom-up” approach?
To discuss this point, let me introduce the concept of the “Seneca Effect” or the “Seneca Cliff.” Let me show the shape of the Seneca curve, drawing it on this board.
You know that I use the term of “Seneca Effect” taking inspiration from something that the Roman philosopher Seneca said long ago; “growth is sluggish but ruin is rapid”. And you see how the curve looks like the projections for emission reductions we have been seeing here.
So, the question is, what causes the collapse we see in the Seneca Curve in complex systems? Well, we can use system dynamics to model the collapse and we know it is not a “top-down” effect, nobody from outside forces the system to collapse. It is a very general phenomenon caused by the interactions of the various elements that compose the system which cooperate to bring it down. And that’s a trick that can be exploited: as I say in my book, “The Seneca Effect“, collapse is not a bug, it is a feature.
Let me see to explain it using the oil industry as an example: see the figure drawn on the board.
Now, you see the segmented line I drew, it keeps going up. It is what the oil companies expect for the future. Their projections, by Exxon for instance, say this: given sufficient investments, we can keep growing the oil production for a number of years, maybe a decade or more.
That’s what they have been doing; despite various dire warnings, the oil industry has been able to keep production growing. It is true that conventional oil (“crude”) peaked at some moment between 2005 and 2010, but it didn’t really decline. Then, the production of “all liquids” kept growing by exploiting other sources such as shale oil.
Of course, the problem is that if the industry continues to make an all-out effort to increase, or at least maintain, production, all we were saying about the need of reducing emissions goes out of the smokestack. Forget about keeping warming below 2 degrees. It would be a disaster.
But look at the Seneca curve, lurking in the graph. It may generate a collapse that would change everything. It would generate more or less the kind of rapidly declining production curve we need for our future survival
The industry doesn’t predict anything like that, but they are vulnerable, very vulnerable. They have a “soft belly” that may send them down the cliff, and very fast. It is the collapse of the demand. That is, we don’t need governments to enact draconian regulations: if the market for a product disappears, then the industry producing it will disappear. Can it happen? Yes, it can.
The key point of the industry’s vulnerability is in the need of large investments to keep the whole thing moving. Facing increasing production costs, they have been able to survive by growing and exploiting economies of scale. This has been possible because investors thought they were investing in a growing industry.
But things have been changing. Consider that typically a good 50% of the oil industry production is gasoline, to this you may add about 20% of diesel fuel and the result is that some 70% of the output of the industry is for internal combustion engines used for transportation.
So far, this has been a growing market, but the electric transportation revolution is coming, and not just that. There is a whole systemic change under the concept of “Transportation as a Service” (TAAS). The combination of the diffusion of electric vehicles and the optimization of the system may rapidly reduce the demand for gasoline and diesel fuel.
We don’t need a large reduction in the demand for transportation fuels to generate a spiral of decline for the oil industry: less demand means less production, less production means the loss of economies of scale, and the loss of the economies of scale means higher costs that translate into higher prices which also depress the demand. And so it goes until it reaches the bottom.
As Lucius Annaeus Seneca said, long ago, “ruin is rapid”. And the ruin of the oil industry is not a bad thing for the earth’s ecosystem and for us all.
Cassandra’s legacy by Ugo Bardi


236 Comments on "The Soft Belly of The Oil Industry: the Upcoming Seneca Collapse"

  1. Makati1 on Tue, 21st Nov 2017 5:35 pm 

    MM, your immaturity is showing. Not to mention your self-important attitude. You are a zero in this world of 7+ billion. The lowest rice farmer is better than you are and more intelligent. At least he is producing something of value. You are probably in your mommy’s basement living on food stamps.

    You are one of the reasons I am cheering on the US collapse. The citizens of the US need to share in the misery and death they have been causing all over the world in their greed and arrogance. Be patient. Your day is coming.

  2. Davy on Tue, 21st Nov 2017 5:55 pm 

    OOOH, mad kat, that is scary. LMFAO. Is that the best you got?
    You are in the worst possible location of anyone on this board for a judgement. You made an awful choice going to one of the most densely populated places in the world and calling it a refuge. Your day is coming soon mad kat. You are old and made a stupid choice of refuges.

  3. MASTERMIND on Tue, 21st Nov 2017 6:06 pm 

    Davy

    Once society collapse Madkat will be one of the first to end up in a cannibals pot. He is the lowing hang fruit. Kids and the elderly will be the first to beaten, stabbed, starved, eaten…

  4. Makati1 on Tue, 21st Nov 2017 6:09 pm 

    “The nation has lost its common sense, its soul and its sanity….

    Our efforts are now focused not on solving core problems but on covering up core problems,…

    The efforts of those in positions of power are now focused on obscuring the truth, marginalizing critics, blaming malevolent external forces, cloaking self-interest with virtue signaling and staking claims to victimhood….

    I’m sorry if this is a shock, but the economic “recovery” is nothing but smoke and mirrors designed to obscure the pillage of the nation’s wealth and income by state-protected cartels. …

    This substitution of trickery for reality solves nothing….

    The USA has lost touch with reality, for its leadership has embraced the notion that trickery and fakery that covers up problems is a substitute for solving problems…

    Unfortunately for our nation, madness is repeating what’s failed and thinking it will work next time…,

    Actions have consequences….”

    http://charleshughsmith.blogspot.com/2017/11/our-national-madness.html

    Be patient. They are coming in full measure.

  5. Davy on Tue, 21st Nov 2017 6:15 pm 

    mad kat, was this how you preached when you were a Mormon Priestess?

    “Be patient. They are coming in full measure.”

  6. MASTERMIND on Tue, 21st Nov 2017 6:17 pm 

    Madkat

    I know those evil Americans are just so greedy….They deserve to pay…LOL You mormons are so self righteous..Muh muh muh FEELINGS…Something somewhere in the world is NOT FAIR..

    Geez smoke a blunt and chill out..I know you cant get it up anymore but stop taking it out on everyone else who can…It makes you feel good to hate and slander the USA.

  7. MASTERMIND on Tue, 21st Nov 2017 6:25 pm 

    Gregt

    I bet when he was a priest he molested little girls or boys…Someone like him who argues for exterminating the jews like Hitler. I assure you has no morals or ethics….Maybe that could have been why he fled…To many skeletons that he was afraid would get out..But his mind has been so conditioned by consuming so much fake news…And he refuses to open his mind or question if the US has done anything good.

  8. Makati1 on Tue, 21st Nov 2017 6:27 pm 

    MM. Sorry I don’t smoke … anything. I respect my body and mind.

    I am only pointing out the US as it really is, not the Disney version. The 3rd world country it really is.

    “There seems to be no end in sight for the cities grabbling with Hepatitis A outbreaks. Spurred by over-regulation and taxation, homelessness is now the norm in many US cities, Salt Lake City being no different. And Health officials in Utah now believe they could continue to see new cases of Hepatitis A for the next several months.”

    http://www.shtfplan.com/headline-news/outbreak-alert-hepatitis-a-outbreak-in-salt-lake-city-expected-to-last-months_11212017

    Third world America is coming out of the closet.

  9. MASTERMIND on Tue, 21st Nov 2017 8:35 pm 

    Madkat

    SHTFPLAN is fake news…good greif..I give you peer reviewed science studies down by scholars and you give me fake news done by paranoid loons. Your the one that is conditioned by propaganda not me.

  10. Makati1 on Tue, 21st Nov 2017 9:00 pm 

    MM, shooting the messenger again? Doesn’t change anything. Keep showing your ignorance.

    Do you dispute the HepA outbreak?

    https://www.cdph.ca.gov/Programs/CID/DCDC/Pages/Immunization/Hepatitis-A-Outbreak.aspx
    http://edition.cnn.com/2017/11/15/health/hepatitis-a-outbreak-vaccine-shortage/index.html
    https://www.hhs.gov/hepatitis/blog/2017/08/08/hepatitis-a-outbreaks-appearing-across-the-country.html
    Etc.

    Happy now?

  11. MASTERMIND on Tue, 21st Nov 2017 10:13 pm 

    Riding the oil price roller coaster

    Instead, the lack of investment today sows the seeds of an oil shortage tomorrow. Exactly when that shortage will materialise is a matter of conjecture. But, given the short lead-in times for shale oil recovery, it will not be too far away. When that day arrives, we will look back on today’s economic and political woes as a golden age of affluence and harmony.

    http://consciousnessofsheep.co.uk/2017/11/21/riding-the-oil-price-rollercoaster/

  12. GregT on Tue, 21st Nov 2017 10:49 pm 

    “When that day arrives, we will look back on today’s economic and political woes as a golden age of affluence and harmony.”

    Yes we will, and those who are already living in abject poverty, will still be living in abject poverty, just like we will.

  13. GregT on Tue, 21st Nov 2017 11:28 pm 

    “mad kat, was this how you preached when you were a Mormon Priestess?”

    Everyone understands that breaking up is hard to do delusionalist.

    It’s been five long years, and he still doesn’t love you any more. FFS, let him go already.

  14. Davy on Wed, 22nd Nov 2017 4:57 am 

    “Yes we will, and those who are already living in abject poverty, will still be living in abject poverty, just like we will.”

    many will be dead widdle especially in areas in extreme overshoot like mad kat’s refuge. Do the math einstein.

  15. Davy on Wed, 22nd Nov 2017 5:01 am 

    wow, you are cute widdle when you flank the emotionally feeble old man. BTW, most people here are tired of prickers that pollute the board with these emotions. Grow up and quit being selfish. say something which you almost never do.

    “Everyone understands that breaking up is hard to do delusionalist.
    It’s been five long years, and he still doesn’t love you any more. FFS, let him go already.”

  16. Davy on Wed, 22nd Nov 2017 5:04 am 

    “Do you dispute the HepA outbreak?”

    mad kat, I know you are suffering dementia so can I remind you that you posted this news already earlier and now you post it again. You are polluting the board with redundant news. BTW, google your last post and you will see that I showed you how bad Hep of all kinds are in the P’s. You got it too so what is your point? You hate America? It takes 5 years to tell us that? What a loser.

  17. GregT on Wed, 22nd Nov 2017 10:37 am 

    Let him go delusionalist. You’re obsessed with the guy.
    You’ve been stalking and pricking him every day for close to 5 years now.

    Can you honestly not see how insane your behaviour has become? You’re plugging these forums up with your name calling, childish rhetoric, and delusional accusations.

    Move on already.

  18. GregT on Wed, 22nd Nov 2017 10:48 am 

    “many will be dead widdle especially in areas in extreme overshoot like mad kat’s refuge. Do the math einstein.”

    Many will be dead everywhere delusionalist, including you and I. Our western way of life is not sustainable, and is doing permanent damage to the Earth’s natural ecosystems. The longer it is maintained, and continues to spread around the world, the worse the consequence will be for both of our children’s futures, and the futures of all generations after that. Not to mention most of the rest of all the species on planet Earth.

  19. Davy on Wed, 22nd Nov 2017 10:55 am 

    Widdle, yeap and it won’t end until he moderates his extremism. If he does not moderate than I will moderate him as I am doing to you lately aslo. You are a different type of prick, widdle, you prick people just because you do not like them. You hate Americans so you prick them. You are not pricking Americans because they are daily telling you how bad you are for being a Canadian like mad kat does. These people you prick are not telling you are fat and stupid like Mad Kat does daily. You are pricking people who don’t ascribe to something like Deagel dot com like you and mad kat do. You are also a stupid hypocrite accusing me of name calling, childish rhetoric, and delusional accusations. You do the same thing just you got the problem of double standards blinders going on. In fact I get tired of your fucks that fly occasionally. You west coast Canadians have foul mouths besides bad attitudes. I name call to three people. You, mad kat, and dutchy. You do not deserve respect dumbass because you are an ugly west coast Canadian anti-American asswipe and have been for years now. So hey widdle go whine somewhere else dumbass.

  20. Davy on Wed, 22nd Nov 2017 11:06 am 

    “Many will be dead everywhere delusionalist, including you and I. Our western way of life is not sustainable, and is doing permanent damage to the Earth’s natural ecosystems.”
    Widdle are you trying to look bright or something because that is about as elementary as it comes. NO SHIT SHERLOCK DUMBASS.

    Why not address my comment that you skipped right over because you are the one that is the delusionalist. ““many will be dead widdle especially in areas in extreme overshoot like mad kat’s refuge. Do the math einstein.” You referenced that comment now are you going to acknowledge I am right and you are wrong or just change the subject that is so often the case with the waffling widdle.

  21. GregT on Wed, 22nd Nov 2017 11:16 am 

    “If he does not moderate than I will moderate him as I am doing to you lately also.”

    You have been flooding these forums with your delusional rants for 5 years now, and it has not accomplished a single thing, other than plugging the forums up with your name calling, childish rhetoric, and delusional accusations.

    You are not that important, and you aren’t moderating anybody. You are purely delusional. A blatantly obvious sign of your deteriorating emotional and psychological conditions. Grow the fuck up already, go and seek some badly needed professional psychological help, and move on.

  22. GregT on Wed, 22nd Nov 2017 11:22 am 

    “many will be dead widdle especially in areas in extreme overshoot like mad kat’s refuge.”

    Those people, like yourself, who are already living lives that many in our society would consider to be less than affluent, will be far better positioned to survive the aftermath of a collapse of modern industrial society. Those people who are completely reliant on modern industrialism, and do not know any other way to live, will be screwed. That would be somewhere between 80 and 90% of the people living in NA.

  23. Davy on Wed, 22nd Nov 2017 12:00 pm 

    Widdle, what is bad about you is your hypocritical double standards. You and Mad Kat do the same thing but unprovoked. Ever consider moderating your extremist anti-Americanism and maybe the board would be in less turmoil. You and Mad Kat are the reason for the steady disturbance to board tranquility. You suck.

  24. GregT on Wed, 22nd Nov 2017 12:09 pm 

    ‘your extremist anti-Americanism”

    I am not anti-American.

    I don’t give a shit about human imaginary lines drawn in the sand, and I am completely against centralized power and control.

    Enough is enough. Move on already.

  25. Ghung on Wed, 22nd Nov 2017 12:14 pm 

    Pots, calling kettles black.

  26. Davy on Wed, 22nd Nov 2017 12:48 pm 

    You are an ugly Anti-American West Coast Canadian, widdle. Pretty much the majority of your time here is spent pricking Americans. You say very little of substance. This board would be much better place without your presence. You suck widdle.

  27. Davy on Wed, 22nd Nov 2017 12:52 pm 

    Ghung, I proposed a mutual understanding that widdle g ignores me and I ignore him but he is not interested. Just sayin

  28. MASTERMIND on Wed, 22nd Nov 2017 4:06 pm 

    WW2 was a resource war—Japan and Germany had to thrust outward to grab oil, or face certain defeat. The USA had more oil so defeat was inevitable. The USA is now in the same predicament, running short of oil and thrusting outward in the Middle East to grab it…

  29. Ghung on Wed, 22nd Nov 2017 5:21 pm 

    Davy said; “Ghung, I proposed a mutual understanding that widdle g ignores me and I ignore him but he is not interested. Just sayin”

    You could start by calling him Greg? That’s his name. Anyway, I read the articles here and want to make comments, but it’s always the same few people sniping at each other, name-calling, and ruining threads for anyone who actually wants to have a discussion. Virtually every thread these days, it seems. And when I get a comment in sideways, someone generally jumps up my ass, usually with a personal attack, as if I’m invading their space. So I rarely comment on the articles anymore.

  30. Davy on Wed, 22nd Nov 2017 5:42 pm 

    “You could start by calling him Greg? That’s his name.”
    Nope, he is widdle g until he stops his pricking me. You earn respect and he has not earned it. He has been pricking me now for years. I have made efforts to work with him but he is not interested. I got to the point where a good offense is better than trying to ignore him. I don’t bother him unless he bothers me. I don’t have time to moderate every extremist here.

    “Anyway, I read the articles here and want to make comments, but it’s always the same few people sniping at each other, name-calling, and ruining threads for anyone who actually wants to have a discussion.”
    Yeap, I agree and this is why you might want to ask mad kat to tone his extremism down just a bit and maybe the ruined threads won’t be so ruined. Dutchy is another who peddles his agenda here although he is busy these days with a client. What kind of discussion is there when you have extremist peddling their agenda. They are going to be moderated until we come to some kind of arrangement. I can tell you this the anti-Americanism has dropped since I have been raising hell. If mad kat calmed down then this could be a respectable board.

    “Virtually every thread these days, it seems. And when I get a comment in sideways, someone generally jumps up my ass, usually with a personal attack, as if I’m invading their space. So I rarely comment on the articles anymore.”
    Yeap, that’s the way it is and I doubt is going to change so make the best of it or hang out on the structured side. I have never been there but I see your name pop up.

    BTW, I can remember you on your high horse raising cain after Trump was elected. I guess you forgot about that, huh. I find people that bitch around here have done most of what they bitch about which is typical. I am all for a clean board but that means a balanced and cooperative one.

  31. Makati1 on Wed, 22nd Nov 2017 6:00 pm 

    #BREAKING: #USNavy aircraft crashes in #PhilippineSea carrying 11 crew and passengers en route to #USSRonaldReagan. Search and rescue underway. More to follow – U.S.Navy

    http://www.zerohedge.com/news/2017-11-22/navy-aircraft-crashed-pacific-11-aboard-3-still-missing

    Navy pilots flying antique (50+ year old) planes. Third world America.

  32. Ghung on Wed, 22nd Nov 2017 6:00 pm 

    “BTW, I can remember you on your high horse raising cain after Trump was elected. I guess you forgot about that, huh. I find people that bitch around here have done most of what they bitch about which is typical. I am all for a clean board but that means a balanced and cooperative one.”

    So you take my calling Trump out for the pathological liar he is as a personal attack?

  33. Davy on Wed, 22nd Nov 2017 6:11 pm 

    Ghung, have you forgotten your attacks on me concerning Trump. No big deal you are pretty mild compared to widdle g and Mad Kat:

  34. Makati1 on Wed, 22nd Nov 2017 6:13 pm 

    Ghung, Davy takes EVERYTHING he disagrees with as a personal attack. He is mentally deranged and best ignored.

  35. Davy on Wed, 22nd Nov 2017 6:14 pm 

    I bet that news gave you a premature orgasm, Mad Kat. You like when Americans die and that doubles when it is
    Military.

  36. Davy on Wed, 22nd Nov 2017 6:20 pm 

    There you go Mad Kat, whine some more for us. Are you feeling the effects of being moderated? Where is your support network? Is widdle g awol again? You are always subdued when he is away.

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