Shortages: Is 'peak oil' idea dead?

[Pops]

I think the part that died was the Overnight Armageddon part, people thought (some hoped) that Mad Max was just around the corner and soon all the stuff that hacks them off would be washed away leaving a clean slate to redraw the world, in their image.

Matt Simmons (and lots of others) didn't help by spouting that oil was going to some crazy high number overnight and stay there. How a banker could think that a quick rise to $500 or $1,000/bbl could be sustained for any amount of time is beyond me. Who reading this could pay $30/gal ($1,000/bbl/42gal/bbl + something for Oh&P) next week and simply continue without making dramatic change?

I said one time way back that by the time oil can stay at $500/bbl it won't matter to most of us because, one way or another, we'll be out of the market anyway.

It is pretty clear that in the short run, demand is amazingly inflexible to smaller spikes. We have after all, tens and hundreds of trillions invested in a system based on liquid fuels that touches every part of our lives. We'll cut back on nearly everything else before we do fuel. But after some magic number is reached, and we cut back on enough other stuff in order to keep the tank full, demand finally drops – mainly because the jobs related to the stuff we cut back on are pruned. Looks like $100-120/bbl might be that number right now but it could be a GDP percentage or some other magic formula. Everything is relative though and someday the price may seem amazingly high - just like I imagine $3.50/gallon for unleaded does today for those folks we once called 99ers and who we now don't call anything because they have been pruned. Eventually we are able to reshuffle our routine and eliminate the most wasteful habits, those of us who waste the most.


I think the idea of overnight armageddon, via oil price, happening to everyone all at once was just the latest in the long line of end of the world scenarios people like to fantasize about. When IT "didn't happen", EOTW hobbyist types lost interest – what fun is TEOTW if it is only the end as I Know It? Or, The End Of The World As The Guy Down The Street Who Lost His Job Knows It? If we aren't all going down to the Thunder Dome together it isn't really Armageddon is it?

The thing is, peak oil is happening. It is happening to the guy down the street, to the Greeks and Brits and looks like maybe to the Chinese. If it weren't for governments inventing money, how many more would be in "official" recession? The US surely would.

We're are on the undulating plateau as expected, the only surprise at this point is the length to which the people with access to government money have gone go to throw it at Chesapeake & Co. The whole fracking frenzy and ongoing, breathless commentary on the amazing revolutionary glut indicates to me just how desperate we are to come up with a liquid solution. But declining returns mean we are using the last of the cheap oil to frack/pound sand/cook asphalt/crack corn to fill up and cruise down the road with our eyes closed yelling LALALALA at the top of our lungs pretending everything is copacetic – or better.

My thought is by the time we cruise off the $20/bbl conventional oil plateau that we've been on for the last 5 or 6 years, the proverbial chickens will be well into the evening commute and throwing the kitchen sink won't scare them away.


This IS peak oil, folks. It is happening all around you. If the end of unlimited fossil fueled growth has left you with an intact income and growing net worth count yourself lucky. And if you have truly have no worries about your kids' future, then Brother, pass that thing down my way 'cuz it's gotta be good!

.

[SeaGypsy]

Yep, it's been popcorn time for 4 years already at least, fun ain't it?

[Heineken]

Complex systems are usually amazingly resilient. For example, even when Germany was being bombed to smithereens in WWII and was cut off from crucial supplies of raw materials, it managed to keep its war-production economy intact into the late fall of 1944. At least a full year longer than anyone imagined possible.

Look at how Germany and Japan recovered from WWII. From total, utter devastation. Look at Vietnam. Or even Argentina.

That's one reason, by the way, why I consider predictions that Europe is today on the edge of a new Dark Age rather laughable. It's faced situations vastly worse than today's, and gone on to realize great success. Over and over. The euro crisis is nothing compared with firestorms.

Predictions, whether by Malthus, Ehrlich, or Kunstler, tend to have woefully premature timing. But that doesn't mean they're wrong. Wrong as to timing but not necessarily as to fact. That's the mistake so many people make---the prediction doesn't pan out on schedule, so people dismiss it absolutely.

Peak oil will happen, obviously, but it's many boom-and-bust cycles away.

[SeaGypsy]

Ah, but how many is many? Many many? Or just almost a few many? Too many?

[Pops]

Peak oil will happen, obviously, but it's many boom-and-bust cycles away.

hmm, interesting logic. you sound convincing right up to: LALALALA.
LOL!

[pstarr]

I think the part that died was the Overnight Armageddon part, people thought (some hoped) that Mad Max was just around the corner and soon all the stuff that hacks them off would be washed away leaving a clean slate to redraw the world, in their image.

Those guys are gone. I wonder if they are still hiding out at their local gun shop perusing the shelves for the lastest neat laser scopes?

Matt Simmons (and lots of others) didn't help by spouting that oil was going to some crazy high number overnight and stay there. How a banker could think that a quick rise to $500 or $1,000/bbl could be sustained for any amount of time is beyond me. Who reading this could pay $30/gal ($1,000/bbl/42gal/bbl + something for Oh&P) next week and simply continue without making dramatic change?

You have to sympathize with Simmons. He went nutsoid at the end, but you would have too. It was a brave thing to take on the rosy assumptions of the most powerful industry the world has ever known. "Twilight in the Desert" remains a great piece of geologic investigative journalism

It is pretty clear that in the short run, demand is amazingly inflexible to smaller spikes. We have after all, tens and hundreds of trillions invested in a system based on liquid fuels that touches every part of our lives. We'll cut back on nearly everything else before we do fuel. But after some magic number is reached, and we cut back on enough other stuff in order to keep the tank full, demand finally drops – mainly because the jobs related to the stuff we cut back on are pruned. Looks like $100-120/bbl might be that number right now but it could be a GDP percentage or some other magic formula. Everything is relative though and someday the price may seem amazingly high - just like I imagine $3.50/gallon for unleaded does today for those folks we once called 99ers and who we now don't call anything because they have been pruned. Eventually we are able to reshuffle our routine and eliminate the most wasteful habits, those of us who waste the most.

It is not a magic number, but seems to be around 5% of GDP in the United States. The "Oil Expense Indicator" varies by country and seems to be a very specific function of particular cheap-oil dependency and specific infrastructure. In our own ways, the impoverished Bangladeshi and the American Consumer have similar oil dependencies. He would die if not for his shallow-water-well diesel pump and we for our daily trips to the shopping center.

It is a shame the "Oil Expense Indicator" is not studied by economists as it would be a useful predictor of this sorry state.

I think the idea of overnight armageddon, via oil price, happening to everyone all at once was just the latest in the long line of end of the world scenarios people like to fantasize about.[/color] When IT "didn't happen", EOTW hobbyist types lost interest – what fun is TEOTW if it is only the end as I Know It? Or, The End Of The World As The Guy Down The Street Who Lost His Job Knows It? If we aren't all going down to the Thunder Dome together it isn't really Armageddon is it?

Key point. Not price but complexity will be our undoing. I don't believe anyone knows what the breaking point will be, where systemic collapse occurs. But it will. This is a fragile system we have designed. Unlike civilizations before us we are dependent completely on one material--oil--for our lives. We have no dachas to fall back on, no rooftop gardens to sustain us, no employment without driving around. No game in the forest. No community. Just too many people eating and breathing petroleum.

The thing is, peak oil is happening. It is happening to the guy down the street, to the Greeks and Brits and looks like maybe to the Chinese. If it weren't for governments inventing money, how many more would be in "official" recession? The US surely would.

We're are on the undulating plateau as expected, the only surprise at this point is the length to which the people with access to government money have gone go to throw it at Chesapeake & Co. The whole fracking frenzy and ongoing, breathless commentary on the amazing revolutionary glut indicates to me just how desperate we are to come up with a liquid solution. But declining returns mean we are using the last of the cheap oil to frack/pound sand/cook asphalt/crack corn to fill up and cruise down the road with our eyes closed yelling LALALALA at the top of our lungs pretending everything is copacetic – or better.

My thought is by the time we cruise off the $20/bbl conventional oil plateau that we've been on for the last 5 or 6 years, the proverbial chickens will be well into the evening commute and throwing the kitchen sink won't scare them away.


This IS peak oil, folks. It is happening all around you. If the end of unlimited fossil fueled growth has left you with an intact income and growing net worth count yourself lucky. And if you have truly have no worries about your kids' future, then Brother, pass that thing down my way 'cuz it's gotta be good!

.

couldn't agree more.

[Plantagenet]

The Wall Street Journal has an editorial today entitled: "Has peak oil peaked"?

has peak oil peaked?

The WSJ says Wall Street isn't afraid of oil shortages any more----the rapid success of the Bakken drilling in the USA and the new Harvard-Kennedy School report on the potential for increasing world oil production to new record levels have caused peak oil to peak....

Who woul've dreamed four years ago that by 2012 the liberal democrats at Harvard and the BP-funded Kennedy School and the Wall street Journal and the evil Republicans on Wall Street would all agree that the way to overcome peak oil was to "drill baby drill" and then "frak baby frak".

[Lore]

As Rod use to say; That road sign up ahead says the Twilight Zone. During peak oil here we've seemed to have moved our thinking there. After all fracking is not drilling. Seems like a troubling difference to me as we rely more and more on expensive ways to squeeze blood from rocks, or isn't that what peak oil was suppose to tell us would happen? I thought it was.

[SeaGypsy]

The alternative insurance policy is the legacy oil we burned over the last and next 10 years. Instead of seeing the writing on the wall and planning for the dwindling of oil, fracking is the Unicorn, long fortold.

[Dismayed]

Hubbert accurately predicted US peak oil in 1970 way back in 1955. The theory is sound, but forecasting isn't an exact science. Even so, he got remarkably close. Skeptics of peak oil really need to show us where new oil is currently being produced to offset consumption.

[Cloud9]

I’m with Pops. We are in the decline. That decline may very well trip up the system.



http://www.feasta.org/wp-content/upload ... de_Off.pdf

[Pops]

Thanks for the link Cloud9, I like those guys at feasta. 'Like' probably isn't the right word, their Tipping Points paper is the most convincing overnight collapse scenario I've read... so far.

[Cloud9]

Pops, I think the key point is this bit: “There is an acknowledged risk that we are now at the peak of global oil production. That is, the amount of affordable oil that can be brought on stream in real-time time is hitting constraints and will decline. Economic and complexity growth are predicated on rising and adaptive energy flows. Constraints on energy flows that cannot be substituted affordably, adaptively, and in real-time, are expressed through constraints on economic activity. If the global economy cannot grow and starts to contract, feedback processes drive further contraction. A contracting economy is incompatible with the credit backing of the globalized economy and the value of all financial assets because it undermines the ability to service debt in real terms. Monetary stability, bank solvency, intermediation and credit are all dependent upon confidence in continuing credit expansion and rising economic activity. That is, the financial and monetary systems that we have come to take for granted were adaptive within a particular set of conditions. When those conditions change, the financial and monetary system keystone-hub may slip out of its historical equilibrium.

…all those changing conditions need to do is drive the globalized economy, or keystone-hubs within it, out of their stability domain, after which the system’s internal interdependencies come out of synch with what they have adapted to and the system can be at risk of collapse. The speed of that collapse is related to the levels of integration and complexity in the system.

One of the effects of massive credit over-expansion and/or the peaking of global oil production is the growing risk of a global systemic financial shock. The likelihood, as with so many financial crises of the past, is that the breakdown of the global financial system will be sudden and catastrophic, marked by complacency and hope turning to fear and panic. It would happen over hours and days.”

http://www.feasta.org/wp-content/upload ... de_Off.pdf

[dinopello]

Another un-con-vert

Pssst, I Heard this Rumor that There’s an Oil and Gas Boom in the U.S.

I myself was a believer in “peak oil,” or at least a modified form of it. Although I had enough faith in market dynamics to know that higher oil prices would stimulate more oil production and that we weren’t going to “run out” of oil any time soon, I did think that demand from China, India and other developing countries would swamp any marginal increases in oil production that the energy sector could manage. I expected oil prices to hit a new, higher plateau — and I certainly didn’t expect a massive rebound in North American production. Well, I was wrong, and I’m honest enough to admit it.

[Pops]

Well, look at the headlines:

U.S. "tight oil" output to double by 2035: EIA
The U.S. government published its first official forecast for booming "tight oil" production on Monday, estimating that shale formations such as the Bakken in North Dakota will more than double output in the next two decades.

Buried way down:

The EIA expects tight oil to account for 20.5 percent of the 5.99 million bpd of the total it expects will be produced in the United States. The 2035 figure is lower than earlier estimates.

But wait! Oil is BOOMING! Output to DOUBLE!