10 Basic Facts of Peak Oil

[Quinny]

WTF is ERORI?

[pstarr]

WTF is ERORI?

dribble from a lazy mind?

[AgentR11]

I think there's an odd factor in play, but I don't know how to characterize it.

Most producer / exporters; are energy exporters and food importers; and a lot of how we think of their "wealthiness" is really dependent upon how cheap that grain import is. Just this year, a few heads are getting lopped off because of the balance in vs out, it caused some unpleasant people to go hungry, and they turned around and did some unpleasant things.

The higher the price of oil, the more sense it makes for grain exporters to turn grain into liquid fuel, the more ethanol is made, the higher the delivered price of the remaining exported grain becomes, and the less wealthy the oil exporter becomes. But its a slow and laggy response, you don't just up and say, "ooh, lets turn all this corn into a few million barrels of ethanol..."

If the price of oil can spike and sucker punch an economy; imagine what the bidding on grain could do if there were only enough available to feed 80% of the population, especially if the buffer of grain storage approaches zero...

[Armageddon]

Since I was a kid I have read that world oil production has peaked and is going to decline. Back then, world production was about 20 MB per day. Since 2004, world oil production has been flat at about 80 MB per day. Will I see PEAK OIL in my lifetime, or is this just a theory?

Conventional oil has already peaked

[Serial_Worrier]

Cornucopia is right around the corner. Really!

[radon]

[

10 11 Basic Facts of Peak Oil
1. "Peak Oil" is the point of maximum oil production followed by terminal decline.
2. Oil is a finite resource on a human time scale.
32. Discovery of new oil fields peaked 40 years ago and very large fields earlier still.
43. Easily extracted (inexpensive) oil will be depleted faster than difficult and expensive oil.
54. As oil production declines and oil exporting nations become wealthier, they consume more oil and reduce their oil exports.
65. Increasing oil prices can increase economically extractable oil reserves by making once unprofitable oil profitable.
76. Increasing oil prices decrease demand by reducing the amount consumers can purchase.
87. Increasing oil prices reduce discretionary income available for other uses depressing the world economy.
98. Scaling up substitutes for oil (i.e., electric cars), will take considerable time, after the need is recognized.
109. Significant amounts of national oil company data are unavailable, obscuring the true situation.
1110. Increasing energy expended in finding and developing, and often in extracting and refining oil reduces the net energy produced.

My 2p in bolds and strikethroughs in the quote.

This list has an advantage of being simple and easy to understand even for a newcomer. While many subsequent comments make sense, the road to perfection never ends, and making the wording too complex would probably benefit mostly people with advanced knowledge of "deep geopolitical/technological" implications of peak oil rather than a curious casual reader. (I actually thought that the final list was to finish up as a sticky for reference at some visible place on the forum).

The list includes 11 points, by the way - point 2 was duplicated.

[Pops]

The list includes 11 points, by the way - point 2 was duplicated.

Thanks for the edits Radon... And thanks for being able to count

[rockdoc123]

Not sure why National was struck out on the oil company data comment. As I said before likely >90% of all international oil companies (IOC) are publically traded and hence all of their reserve information is available through press releases on year end results or filings under the SEC, SEDAR, etc. There are serious penalties for fabricating such data and in most cases a portion of the reserves has been subject to third party audits. The lack of transparency is with respect to national oil companies such as Aramco, PDVSA and others where foreign companies are not allowed access.

[Keith_McClary]

1. "Peak Oil" is the point of maximum oil production followed by terminal decline.
2. Oil is a finite resource on a human time scale.

1) Oil is a finite resource on a human time scale. Therefore, production must reach a maximum, called "Peak Oil", followed by terminal decline.

There's only one peak oil fact here. The second sentence is a mathematical deduction and a definition.

9. Significant amounts of national oil company data are unavailable

Can we get more precise than "Significant amounts" eg., "about x%" or "a third".

[AdTheNad]

There are serious penalties for fabricating such data and in most cases a portion of the reserves has been subject to third party audits.

Enron was audited, and there were serious penalties for the fraud they committed too. It is clear that penalties and auditing is not enough to prevent fraud on a massive scale where strong enough incentives are involved.

[rockdoc123]

Enron was audited, and there were serious penalties for the fraud they committed too. It is clear that penalties and auditing is not enough to prevent fraud on a massive scale where strong enough incentives are involved.

It was the Enron scandal that brought about Sarbanes Oxley Act which precipitated the current restrictions and requirements on reserve reporting by all oil companies. The third party audits or expert opinions are also actionable at the discretion of the various regulatory bodies. I've been through numerous such audits both pre and post Sarbanes Oxley and from what I can see there is little room to maneuver these days.

[static66]

Hey POPS!
I have been away on vacation for the last 4 years working in Vermont on regional food production models and logistics plans to prepare for the inevitable PO/CC scenarios. What i have come back too is where we are with global BBL per Day numbers that are seemingly going up to levels that we initially thought were impossible just 5 years ago? We stand at just about 90MBD now in 2011 and the EIA says we will surpass the 100MBD mark in 12-14 months. I remember when we were all chirping about 74.62MBD as the Peak in 2008. What gives? Is there alot more oil and refining capacity available to us that we do not know about? Let me know.

Thanks

[Pops]

Hey static, I think this thread explains it nicely:
why-is-chevron-producing-oil-costing-70-t61785.html

[Pops]

Anyway,

I plead caffeine depletion as my excuse for striking "national" without discussion, sorry.

Looking at this list from EnergyBurrito, which countries are the most/least transparent re: increased capacity and are they nationals or corporate?

[rockdoc123]

From your list the countries where foreign IOC's operate and hence report reserves are (in no particular order) Nigeria, Norway, UAE, Angola, Azerbaijan, Canada, Libya, Oman and the UK. Of the others Russia and Venezuela have had the most recent reporting by foreign companies but the records are not good. The vast majority of their reserve discoveries were already reported prior to effective nationalization so the numbers may not be too bad. Saudi and Mexico do report quite often in the press and presentations at various conferences with regards to their reserves but there are no independant eyes on those numbers.
Everyone points to Saudi, Iraq and Iran as being problematic mainly because their reserve complement is so high.
My guess is the Iraq reserve numbers captured by IHS Energy aren't bad given that all the discoveries were made back well prior to Gulf War I. The Saudis don't tend to make outrageous claims and they back up what they predict with investment. As an example when they said they would increase spare capacity with the megaprojects they did so through billions of investment. Iran on the other hand seems to like to report huge discoveries in areas that seem somewhat unreasonable if you know something about the geology.

[pstarr]

Sure. ME reserve reporting is squeaky clean. Like a pig in a possum belly.



Maybe we should add Rule # 11 (like the volume control in "Spinal Tap")

11) ME oil producers lie.

[Ayoob]

how about the simple definition which so many people seem to misunderstand?

it is the point at which global production of oil will reach its maximum rate, after which production will gradually decline at an annual rate 6.7%, thus dropping to half in ten short years and essentially zero in forty five.

I believe this is important as it means that economics and technology will have little significant impacts on timing, ultimate value and shape of the peak.

There. I fixed it for you.

And there it is. This is what peak oil boils down to. Find the halving time, multiply that time by 5.5, and that gives you the zero date. If your 6.7% number is correct, the zero date is 55 years. That would be the most optimistic scenario, assuming that no producers sit on their yield, that political instability has no effect on oil production, that none is lost somehow, that we suck out the last drop and sell it for fair market value.

What happens at the first halving time? Well, half the oil consumption that happens today will cease. I'm sure some will continue their lifestyle by virtue of efficiency, others by inherited riches. However, the rest will share the loss of production. I wonder what the curve will look like? Will people walk five or ten miles to a minimum wage job because the cost of fuel will eat their whole paycheck? How much oil goes into the food that fuels that ten mile walk to the minimum wage job?

I've wondered for some time whether we'll go back to having human servants for the upper middle class to do their cooking and cleaning in the home or something like that. You hire somebody to be your personal servant, share living quarters. One works in the public or private sectors, the other picks up the crumbs left behind by that former middle class person as their servant.

What does the second halving time look like? We're down to 25% oil production in 20 years, I figure it's game over for all but the very few to buy internal combustion engine vehicles, or all oil is shunted to food production and people go back to reading books, playing sports, going to school, and hanging out. And working in the fields. Hard manual labor for almost all of us. The few remaining will be doctors, a few high ranking military and police officials, and the guys who make sure the sewer system keeps working.

The third?

Everyone fighting over a job picking apples with baseball bats and an image of their hungry children at home in the back of their minds.

[Pops]

Just the facts's Ma'am!
Lets try to keep this one thread to a discussion of specific provable facts, please, no forecasting allowed.

Personally the reserve jiggering isn't as big a deal to me anymore. When the argument was about an impending conventional oil peak this seemed important but we're past that - now it's about trying to get by on expensive energy until whatever big transition occurs.

But at any rate, most of the questionable reserves revisions are in countries with NOCs and no independent auditing and I've never seen an explanation for that aside from simple coincidence.

[rockdoc123]

Sure. ME reserve reporting is squeaky clean. Like a pig in a possum belly

a point made several times is the bump coincides with the point at which OPEC changed the manner by which calculation of production allocations would be handled. One entirely credible possibility is that they included probable reserves with proven as the criteria. This would explain a sudden bump of this nature.

[Pops]

OK! Sorry about the distraction.
Thanks to everyone for trying to talk down our latest suicide-spammer. A couple of you went to some trouble so if you want me to resurrect your posts just let me know.
-------

One entirely credible possibility is that they included probable reserves with proven as the criteria.

The thing that makes this a problem is that we are just guessing. Just as KSA wants to bring down the cost of oil right now to keep the junkie on the hook, publishing big numbers gives the impression there is no need to move away from oil.