[Herr Meier]

As you can see, even with a EROEI of 1.1, you still get your wood and don't need to freeze in winter.

explain where your unlimited time to cut the extra 9 cords comes from...

obviously you don't have to work very hard to survive,

I wonder why that is?

For simplicity, time is not an argument in this model, but it doesn't matter. If you run out of time, you will have to buy 2 very expensive advanced technology wood cut machines and your EROEI will drop to 1.05. Cutting 19 cords of wood, having to sell 18, just to be able to get the single cord you need.

[Quinny]

Just watched local team win 3-2 and had a few beers after the match. Now sat waiting for dinner to be served, Steak Chips and peas with hoe brewed wine. Doom is so shit

[kublikhan]

In a surprise move this week, Saudi Arabia cut the price of its flagship Arab light oil, which it sells mostly to its Asian customers, by one dollar a barrel. It also cut prices to its customers in the United States and Europe by $.40 a barrel. This brings Saudi Arabia’s prices below those offered by OPEC member Qatar and non-OPEC member Oman. Oil futures traders are holding their breaths, waiting for Qatar and Oman to cut their prices in response, setting off a full-scale oil price war.

The simple economics of supply and demand have already driven the price of oil down by almost 20 percent since June, and a number of traders and other observers are suggesting those prices have much further to drop. Analyst John Kilduff of Again Capital said, “I think we’re going to see the low $80s fairly quickly from here,” while Fadel Gheit, a senior energy analyst at Oppenheimer explained, “It’s both supply and demand. It’s basically the perfect storm that brought all prices down. You have plenty of supply, which you never thought possible, and all of a sudden, demand is shrinking: China is slowing down [and] Europe never recovered.”

If oil prices drop too far, however, production will be stymied. If the price of crude does drop to $70 barrel and stays there for an extended period, energy exploration companies will have little incentive to discover and develop additional resources.

Saudi Arabia Cuts Oil Prices, Could Spark Price War

WTI Crude Oil $89.74

Crude Oil and Commodity Prices

[Herr Meier]

[You obviously have no idea what eroei means;

is that from the guy who said eroei is approaching 0?

your analogy works if you were to harvest wood with a steam-engine powered saw, built and delivered by a steam power.

Great. Then let's assume it's harvested and processed by a steam machine, if it helps you understand. So you agree with me, that even with a WROWI (Wood Returned On Wood Invested) of approaching 1, I don't have to have reduced activity. Instead the opposite is true, I make very effort to cut an enormous amount of wood just to get my single cord.

Let's try another example. Without beer you die. So you brew your own beer. The taxman comes and every year he wants some more percentage from your brew. Assuming you can't cheat but have no choice in paying the tax, what would you do? Keep brewing the same amount of beer every year, having less and less for yourself. Or you would go to heroic efforts to brew as much as possible so you get the amount you need after taxes? Clearly as hell your standard of living will drop, as more and more of your time will be devoted to brewing beer, yet you can see that your overall economic activity did not drop. You're 100% busy and employed in brewing beer. Cheers!

Your second assertion, that a replacement industrial/economic infrastructure (run on wood?), is necessarily available is also nonsense. We built our world on oil. It will end without oil.

It was an example, for simplicity of understanding. I thought you owned some wood? And you might be better able to relate the argument at hand to a more tangible asset in your own backyard than to a resource far removed.

The oil age will end when
1. the OIL RETURNED ON OIL INVESTED (OROI) does not provide basic necessities for people (food, shelter, safety, some medical, some cheap entertainment)
2. a sufficient substitute for oil becomes available

You can have full employment and a GDP as large as todays even with $500 oil, albeit at a reduced standard of living, no doubt.

[Strummer]

While that scenario is theoretically possible and correct, the colossal infrastructure and labor needed for such a low-eroei world would be very likely limited by other resource constraints as per Liebig's law of the minimum.

[rockdoc123]

Or continuing to drill and re-drill tight shale. Which requires $100 oil.

Not true. There is a broad range in breakeven price for shale based liquids including oil. When natural gas prices are OK that breakeven drops since most of the highly recoverable liquids come with a higher gas content (need the producing energy because of low permeability). There are shale projects that currently sit around $65/bbl breakeven and there are others that are up in the mid eighties. I know of none that require $100/bbl.

[ennui2]

It's now been proven that $100 oil does not usher in Mad Max. If there's anything Matt Simmons explained before he died in a hot-tub was that oil is cheap even when everyone is whining about how expensive it is. When oil is $200 or even $300 there will probably be a continuance of a recognizable BAU, even if it's got everyone driving plugins and carpooling and telecommuting. But BAU as we know it, complete with stocked store shelves, will find a way to soldier on. So I think that the hype that unconventional would be too costly just hasn't panned out and will not pan out.

[Strummer]

It's now been proven that $100 oil does not usher in Mad Max.

This assumes that we are generating same (or greater) amouts of (real) investment capital as we currently use. It could be that we are actually depleting the stock of real investment capital that was created with cheap oil without replenishing it. Which is one of the important points of Limits To Growth, Tainter, and others.

[copious.abundance]

I think it might be time to bump up one of Pops' favorite charts.

LOL

[dolanbaker]

Yes, oil has gone through the floor and you know what means don't you, less production after a few frackers go to the wall. Which will be soon followed by a price spike upwards when traders realise that there is a hole in supply coming down the line.

Fill yer tanks while its cheap(ish) still, it is twice what it was a decade ago!

[ROCKMAN]

Dolan - Similar to the movie "The Graduate" where the one word was "plastics" I've got two words for you: Time lag. I would like to believe we'll cycle through this bump in the road so quickly. But I doubt it. IMHO the global economies are just catching up to the spike in oil prices: time lag. In 1980 the Inflation adjusted price of oil was $100+/bbl and 6 years later the global economy caught up and the adjusted price fell below $20/bbl. Time lag. And not that long ago oil prices once again began their match above $100/bbl. And now, oddly enough, 6 years later oil prices are heading down. Time lag.

[Keith_McClary]

Dolan - Similar to the movie "The Graduate" where the one word was "plastics" I've got two words for you: Time lag. I would like to believe we'll cycle through this bump in the road so quickly. But I doubt it. IMHO the global economies are just catching up to the spike in oil prices: time lag. In 1980 the Inflation adjusted price of oil was $100+/bbl and 6 years later the global economy caught up and the adjusted price fell below $20/bbl. Time lag. And not that long ago oil prices once again began their match above $100/bbl. And now, oddly enough, 6 years later oil prices are heading down. Time lag.

Do you think the TL is getting longer? Decades ago you could increase production just by drilling a few more wells in the old giant fields. Now you need to do multi-year projects like deepwater or build pipelines to Siberia. (Some exceptions, eg. fracking.)

As you pointed out, the big projects have sunk costs and need cash flow so they don't cut production when prices drop.

I'm thinking that a longer TL would mean more price volatility, since producers cannot quickly match changes in demand.

[dolanbaker]

As you pointed out, the big projects have sunk costs and need cash flow so they don't cut production when prices drop.

Wouldn't it be different for the tight oil plays due to the fact that they have to constantly drill to maintain growth in production. How quickly would production go into decline if the drilling & fracking of additional wells was suspended for a while.

[ROCKMAN]

Keith - Difficult to tell how long the TL to higher prices/more drilling. It will depend on economic growth resuming. But I doubt we'll even see the decline slow up much in the next year. The global economy just can't respond that quickly IMHO even if oil prices drop another $30/bbl. But that expectation is based on the assumption that we've begun a serious global retraction. I suspect it may have but we probably need another 6 months to be sure.

But this bust is going to be different the those of the past since we've reached global PO or we are at least much closer to it. When oil prices recover...1 year?...3 years?...6 years?... the shales, DW, etc. will heat up again. But in the interim global depletion will continue and we'll be starting over from a lower base line. Here's where the TL might have it's most significant impact in our petroleum feed history.

Dolan - If we see a significant drop in horizontal drilling we will see a significant drop in US oil production very quickly. The very high decline rate of wells drilled the last 2-3 years guarantees it. But wells drilled further back are declining much slower. Also the GOM Deep Water fields will keep producing. Low oil prices will slow development of new fields out there but that will take years to show up in the US production rate. And then it's a question of how long the downturn in prices/drilling activity lasts IMHO.

[agramante]

Herr, one major problem in your thinking is that oil exploration and production is a capital-intensive, not labor-intensive, industry. There isn't enough work to keep the entire planet, or the entire USA, or the entire state of Texas, or the entire state of Louisiana, on the job prospecting for and producing oil. According to a study commissioned by the API (I haven't looked over the methodology), 9.8M Americans were employed in some capacity within the oil & gas industry in 2011. Let's say (interpolating between censuses) that the population of the US was 310M at the time (it was 315M in 2013). That comes out to about 3.2% of the American population supported directly in some way by oil & gas exploration and production. We've got a ways to go if that figure is going to climb to 66% (the 2011 percentage of Americans of working age).

Now if you're looking for a good, labor-intensive industry, well, there's preindustrial farming. Even during the early part of the industrial age in the USA--around 1870--it's been estimated that 70-80% of the population was engaged in agriculture. Now that's full employment! Now, however, it's down below 2%--comparable to employment in oil & gas, actually. And those stats are from the decentralized society we have in the USA. You can go farther back to more bureaucratized and hieratic societies like ancient Egypt--beyond farming, they had other forms of mass employment. Ever been to see the Pyramids? More relevantly, would you like to have been one of the workers? From what I understand they were kept pretty busy. And their life might not have been so different from what you propose, a full economy of people devoted exclusively to producing energy, with no spare wealth to devote to other things like education, clothing, transportation, furnishings, recreation or food.

[agramante]

BTW, Herr, EROEI can approach zero, sort of like you can have a negative pH. EROEI = energy returned (say, in calories) divided by energy invested (again, in calories). As the return approaches, but is still greater than, investment, EROEI will asymptotically approach one. But if return is less than invested, the lower it goes, the closer EROEI approaches to zero. It's pretty simple. That's obviously not something you'll run into in a commercial environment but Pstarr was quite correct to raise the possibility.