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Gail: Energy Supply, Population, and the Economy

General discussions of the systemic, societal and civilisational effects of depletion.

Gail Tverberg: The beginning of the end of oil production

Unread postby DesuMaiden » Fri 10 Apr 2015, 19:39:47

Watch the following video.

https://www.youtube.com/watch?v=IOR3bdRJo98

It is very interesting.

She is one of the few female commenters on peak oil. She makes some very interesting points on peak oil, and how worldwide oil production will soon peak and start to decline thereafter. It is a 40 minute long video, so sit back and enjoy it.
History repeats itself. Just everytime with different characters and players.
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Re: Gail Tverberg: The beginning of the end of oil productio

Unread postby Rod_Cloutier » Sat 11 Apr 2015, 11:51:55

This came out 4 months ago- you just found this now?

Several of the main commentators on this forum are women. Agent R, Tanada, Planetagent, airline pilot, among others.
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Re: Gail Tverberg: The beginning of the end of oil productio

Unread postby ROCKMAN » Sat 11 Apr 2015, 13:40:45

Just one picky point: $47/bbl is not "cheaper oil". It is less expensive the it had been but just for the last 10 years. But for the last 30 years the inflation adjusted price of oil has been less than $47/bbl for 20 of the last 30 years. And from 1986 to 2005 as we had lower prices we saw oil production continually decrease. Which is the basis of the POD concept. Increased oil production in the US obviously correlates directly with the price of oil and not "new" trends and technology. Those who have argued otherwise are about to have their asses handed to them as we watch the oil "boom" disappear as the rig rate drops. The trends and the tech are still there...$90+/bbl oil is no longer.

And an excellent point about the net benefit of lower oil prices to the US GDP being minimal because the gain of that macroeconomic metric by consumers is offset by the losses for the energy industry. Also the potential loss of the financial system may have a greater negative impact on the energy sector then the lower oil price will directly have. The oil patch can survive with oil under $50/bbl...it did for 20 years during that 20 year period. But most of it can't function very well without an healthy finance machine.
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Re: Gail Tverberg: The beginning of the end of oil productio

Unread postby ROCKMAN » Sat 11 Apr 2015, 18:38:28

pstarr - True. And then factor in the huge gain in low cost debt which probably won't be available in the future now will it be cheap.
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Re: Gail Tverberg: The beginning of the end of oil productio

Unread postby AirlinePilot » Mon 13 Apr 2015, 14:37:49

HAHAHA!! Now Im a woman?? You guys crack me up. As someone else said..she is just my fantasy of a hot copilot.
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Re: Gail Tverberg: The beginning of the end of oil productio

Unread postby ennui2 » Wed 15 Apr 2015, 20:34:03

There's no way Plantagenet is a woman, although who knows, that might have explained his/her support of Sarah "Drill, Baby, Drill" Palin.
"If the oil price crosses above the Etp maximum oil price curve within the next month, I will leave the forum." --SumYunGai (9/21/2016)
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Re: Gail Tverberg: The beginning of the end of oil productio

Unread postby sparky » Thu 16 Apr 2015, 06:43:00

.
Time to come clean , I'm not human !
I'm a program from wooloomooloo university

http://en.wikipedia.org/wiki/Woolloomooloo
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Re: Gail Tverberg: The beginning of the end of oil productio

Unread postby Subjectivist » Tue 09 Jun 2015, 22:04:13

Gail has posted a new report,
http://ourfiniteworld.com/2015/06/09/wh ... -too-high/

Are the Projections of EIA, IEA, BP, and all the Others Right?

Perhaps these projections would be reasonable, if oil prices could immediately bounce to $130 per barrel and could continue to inflate in the years ahead.

If, on the other hand, low oil prices are really being caused by lagging wages of ordinary workers and the failure of debt levels to keep rising, then I don’t think we can expect oil prices to reach these lofty levels. Instead, we can expect oil production to fall because of low prices.

The amount of oil available at $60 per barrel seems to be quite low. Perhaps a little low-priced oil would be available from Kuwait and Qatar at that price, but not much else. Some additional oil might be obtained, if governments of non-oil exporters (such as the USA and China) choose to cut back their tax levels on oil companies. Even with the additional oil made possible by lower taxes, total oil supply would still be far less than needed to run today’s world economy.

The world economy would need to contract greatly in order to shrink down to the oil available. Such shrinkage might be accomplished by a cutback in trade and loss of jobs. Debt defaults would likely be another feature of the new smaller economy. Such a scenario would explain how future oil production may deviate significantly from the forecasts of EIA, IEA, and BP.
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Re: Gail Tverberg: The beginning of the end of oil productio

Unread postby Pops » Wed 10 Jun 2015, 12:48:12

Funny, Gail here says the EIA is wrong because it simply projects a trend and calls it a forecast. I hate to say it but the entire PO idea comes from the fact that oil discoveries are trending down — but only when you plot the amounts eventually extracted back to the date the field was originally discovered rather than just plotting the initial discovery amount. A plot showing original discovery amounts and plotting reserve growth as it happens, IOW, a plot of the contemporary estimates of reserve,s would show increasing "discoveries". BP says current reserves are more than twice what they were in 1980. Reserves to production are said to be 55 years today, 35 years ago, reserves at then current use, was only 29 years.

To be honest, extend a trend is exactly how the entire climate debate goes. When I was a kid "a majority of scientists" believed we were entering a new ice age because the 20 or 30 year trend was down.
Today, well; you know.


Ditto population growth. Mortality rates falling drove the population growth rate. 50 years ago extending the population trend line led to the fear of overpopulation. But, now the mortality rate has flattened, which will allow birth rate to catch up — or "catch down" as the case may be — and the population growth curve is starting to bend. Extending that trend would lead to falling population globally just as it has done locally in Japan, Eastern Europe, etc — as long as the falling fertility rate trend continues.

The point is, one needs to be careful about projecting trend lines.
The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves -- in their separate, and individual capacities.
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Re: Gail Tverberg: The beginning of the end of oil productio

Unread postby sparky » Wed 10 Jun 2015, 16:46:10

.
Good point , to demonstrate the absurdity of it ,
just project a trend into the past data and see if it make any sense ,
...if it does , then ,maybe, you are on something !
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Re: Gail Tverberg: The beginning of the end of oil productio

Unread postby MD » Thu 11 Jun 2015, 02:42:24

Repent wrote:This came out 4 months ago- you just found this now?

Several of the main commentators on this forum are women. Agent R, Tanada, Planetagent, airline pilot, among others.


You have some issues with gender confusion.
:lol:
Stop filling dumpsters, as much as you possibly can, and everything will get better.

Just think it through.
It's not hard to do.
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Re: Gail Tverberg: The beginning of the end of oil productio

Unread postby Plantagenet » Thu 11 Jun 2015, 03:42:42

Pops wrote:
To be honest, extend a trend is exactly how the entire climate debate goes.


Ummmm....not really. The global warming predictions are based on huge computer global climate models (GCMs) run on supercomputers---the GCMs attempt to simulate the all the processes of the planet---clouds, winds, storms, snow melt, etc. For the most part these are the same kinds of GCMs used to predict the weather. Weather forecasts are pretty good for several days but then break down, but if you run the the computer model to simulate years of weather, it does a darn good job of simulating the current climate.

Global warming predictions are based on pumping up the CO2 in the global climate models and then running the model to simulate years of weather at the higher CO2 levels and then picking out various parameters like global temperature.

The simple linear projections of global warming you see aren't just extending trends, but instead are plots of the actual output from many many supercomputer model simulations run over and over again at varying CO2 levels.

Pops wrote:
The point is, one needs to be careful about projecting trend lines.


Yup---you're 100% right about that,and the EIA, IEA, and maybe even BP. do indeed seem to make their energy projections by extending trends lines at 1% or 2% per year or whatever rate things are currently tending at. Thats why the kind of top-down region by region evaluation of oil production and oil peaking that was done by Colin Campbell and Jean Lahore and others was so compelling and convincing when it came to prediction that peak oil would happen in 2005-2010. Those guys really knew their stuff and they seemed to be crunching data while the EIA was just projecting trend lines.

Unfortunately, Colin Campbell et alia forgot to include shale oil when they were adding up all the oil production and predicting the date of peak oil.
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Re: Gail Tverberg: The beginning of the end of oil productio

Unread postby Lore » Thu 11 Jun 2015, 07:47:37

Climate modelers also forget, or should I say don't include positive feedbacks in trends, since there is no way to accurately determine when a tipping point is met.

The calculations are based on hind casting and not just best guesses to calculate a model or trend.

Trends are indicative of what to expect, but does it really matter if we're somewhere within the margin of error in them?
The things that will destroy America are prosperity-at-any-price, peace-at-any-price, safety-first instead of duty-first, the love of soft living, and the get-rich-quick theory of life.
... Theodore Roosevelt
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Re: Gail Tverberg: The beginning of the end of oil productio

Unread postby Pops » Thu 11 Jun 2015, 09:04:52

I'm a visual guy, so charts — pictures of trends, are how I best understand lots of different things. I'm not saying the trend is always wrong, just that they are always history, an expression of BAU. They expire as soon as business isn't usual and something changes to bend the line.

Here's the miles driven plot I've linked a couple of times already (sorry, it has been cited many times over the last few years so it is important). It'd began declining ar the end of 2007 in the US, and did so for almost 5 years, but it popped right back to a new high in the last few months. It had looked so much like a trend that it was cited as evidence of Peak Demand, but all along it only meant some trips to the Quik Sac were postponed due to high price and peak demand was bogus.

Image

At least that is my conclusion after looking at the current trend. LOL

.
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Re: Gail Tverberg: The beginning of the end of oil productio

Unread postby Subjectivist » Thu 11 Jun 2015, 11:32:45

Pops I never bought into the whole peak demand meme because I judged for myself. I and the people I know offline in the real world were not driving as much because of costs, not because we didn't want to drive. I cite your graph above as evidence of this fact.
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Re: Gail Tverberg: The beginning of the end of oil productio

Unread postby ralfy » Thu 11 Jun 2015, 12:23:00

Given population, one can probably consider population momentum (discussed in another thread), and that in light of production per capita:

http://cassandralegacy.blogspot.com/201 ... k-oil.html

Also, see how dreams of a middle class lifestyle worldwide:

http://www.bbc.com/news/business-22956470

might affect demand per capita.

And look at not just oil but many other factors. For example,

http://www.theguardian.com/commentisfre ... g-collapse
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Re: Gail: Where are we headed?

Unread postby Tanada » Tue 31 May 2016, 09:11:58

Gail's latest post is out, but IMO its a very wordy way of saying no matter what the party is over.

Conclusion

We are certainly at a worrying point in history. Our networked economy is more complex than most researchers have considered possible. We seem to be headed for collapse because of low prices, rather than high. The base scenario of the 1972 book “The Limits to Growth,” by Donella Meadows and others, seems to indicate that the world will likely reach limits about the current decade.

The modeling done in 1972 laid out the basic situation, but could not be expected to explain precisely how collapse would occur. Now that we are reaching the expected time frame, we can see more clearly what seems to be happening. We need to be examining what is really happening, rather than tying ourselves to outdated ideas of how the economic system works, and thus, what symptoms we should expect as we approach limits. It may be that $50 per barrel oil is one of the signs that collapse is not far away.

https://ourfiniteworld.com/2016/05/31/5 ... esnt-work/

I will give her credit, this time the doom comes from the fact that commodity prices are too low to encourage high employment and tax revenue. So high prices are bad for the economy, moderate prices are bad for the economy and low prices are very bad for the economy.

Didn't a lot of us think $50/bbl was a scary as heck prospect back in 2006? I know I certainly did! We went through a massive period of change in the oil economy in the last decade. If the thought of the lower tax income government gets from $50/bbl oil is actually a significant blow to budgets compared to what the government saves on energy costing just half of what it cost two years ago. Same thing for unemployed oil/gas workers, commodity extraction industries have always gone through boom/bust cycles since they started being financed with massive debt.

When a business has to self fund as a general rule they watch every penny and only spend as needed because they are putting "real" assets at risk. However when a business is created using debt borrowed from others and the people running the place are protected by bankruptcy laws if they mess up it leads to a huge swell of foolish spending, the classic boom which then gets followed by the bust.

Without easy debt those cycles still exist, but the scale is very small in comparison.

Whoops, back to Gail's latest article. If you follow the link just below the quote you can read through the whole thing, I only quoted a very small portion of it. To me it reads very much like circular logic, like there is only one possible price where the economy grows and people can afford oil at the same time. IMO this is a completely faulty viewpoint because oil price and usefulness is a sliding scale, when prices are down like they are today more people buy SUV's. When oil is $147/bbl the low cost oil producers are making money hand over fist, but the rest of us with $5.00/gallon gasoline are cutting our driving to a minimum and looking for fuel efficient vehicles. Cause and effect rule through the whole range.

Looked at another way, in most OPEC countries the price of energy is literally trivial as a portion of the budget. People have no motivation to conserve energy at all. I will compare that to say, people who live in the Great Lakes region of North America like myself. We have no motivation to conserve potable water, the cost of city water is very affordable. At the same time people in India and Pakistan right now are suffering from the lack of potable water due to droughts and heat waves coupled with their very high population. I can't use California as an example because the government massively subsidizes water prices there keep them artificially very low.

If all we needed was a magic price point where revenues would be high enough to stimulate the economy while also being priced low enough for the average consumer then the government top down approach of setting the price would fix everything. Unfortunately there is a brilliant economic theory called "the Laffer Curve" that demonstrates how prices and costs change over a continuum of values. There is a point on the curve where you get maximum of X for a minimum of Y, in this case economic stimulation for lowest price of oil. However circumstances constantly influence exactly where that price point needs to be for maximum effect. In essence the Laffer Curve is a map of free market dynamics. The fewer taxes and regulations and the more small businesses instead of large monopolies the more flexible the price point is for greatest efficiency. Contrariwise the more regulations, the bigger the bureaucracy, the more very large "too big to fail" businesses that make up the whole economy the less flexible the situation is and the slower it is to adapt to changing circumstances.

This IMO is a good part of the reason young governments tend to have more impact, they do not have massive regulatory bodies and they tend to not allow big outside companies to dominate their political decision making process. This is also the reason several of the USA founding fathers thought a 'revolution' every 40 years or so would be a good thing, because it would reset the situation to the government being of limited impact and also clear out all the big monied interests from their positions of power.

We are in the place now where we have lost our flexibility. When oil went from $32/bbl to $147/bbl over just five years time it strained everything massively and caused huge disruptions. Unfortunately instead of letting the economy really crash and reset from a true sound floor level the USA government massively intervened under the "too big to fail" theory of management. As a result very little changed structurally and though oil prices dove deep in late 2008 and early 2009 they settled in the $80-$110/bbl band and stayed there with lots of new debt being dumped into the industry for fracking in 2010-2014. When KSA decided they wanted to pop that bubble it was too late, the slow as a glacier economy had begun structural adaptation to oil priced in that range. Despite mass lay offs in the Oil sector of the economy we have not had a total bubble burst event. Yes a lot of small fish are already bankrupt and they are starting to disappear, but they only existed in the first place because of the artificial QE money printing spree of the USA.

Unless people suddenly lose confidence in the USA dollar, which no longer seems like a likely thing to happen given all the massive fraud and abuse people have accepted as normal, the economy such as it is will continue until Peak Oil actually causes physical shortages. After that there are many paths, governments that make good decisions will manage to keep BAU for a while after peak, others who make poor decisions will not.
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Re: Gail: Where are we headed?

Unread postby ennui2 » Tue 31 May 2016, 10:05:12

Yep. Gail is out of his league in trying her hand at economic theory, and her "all roads lead to doom" circular logic is transparent.
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