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The Stairway to ...

Discuss research and forecasts regarding hydrocarbon depletion.

The Stairway to ...

Unread postby Pops » Mon 09 Nov 2015, 20:10:02

Image

So this is my latest doodle. Nothing new, just an exercise in looking at how the price of oil might rise as the volume of oil consumed falls. I'm just imagining that the price reacts when consumption at a certain level exceeds the limit outlined by a Hubert shaped curve. Hubbert thought the curve is the theoretical maximum shape of production unconstrained by economics and such trivia.


some words
As reserves are depleted the difficulty and costs rise, so will the required price
But there is a limit to how much consumers can pay for a given amount of production
However, rather than foregoing oil altogether, they will reduce their consumption and continue to buy what they can afford by increasing the utility they receive per unit*

use less / pay more

Looking at the consumption plot, at first it remains flat, but because it is depleting the resource it moves beyond the hubbert curve (turning red to symbolize the supply deficit)
At that point the price starts to rise.
Then at some point of price pain, demand falls (or production increases marginally).
Demand falls until there is once again a supply surplus (and the plot turns green)
Notice the price also eases at that point
and the fall in demand is halted
Until depletion...

I also sketched in some little curves (a la Laherrere) indicating new resources that become available as the price increases.
Note EROI is inherent in increasing costs. It is impossible to turn a profit for long spending more on energy that you receive for product.

* there are lots of substitutes for oil, just no good replacements.
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.
-- Abraham Lincoln, Fragment on Government (July 1, 1854)
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Re: The Stairway to ...

Unread postby Ibon » Mon 09 Nov 2015, 20:45:11

May I put on my optimist's hat and say that this becomes a stairway to a more sustainable use of resources. The image I get of use less pay more is one of frugality and valuing of the resource. Matt Simmons years ago was one of the first that said oil should be far more expensive when you consider the amount of work a barrel performs. Isn't this stairway taking us against our wills in this direction to the point that it is no longer against our wills but in accordance with respecting the resource for its inherent value. Or?

Think about a liter of gasoline in a chainsaw and how much work it can perform and compare this to a hummer driving 10 miles to buy a gallon of ice cream.
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Re: The Stairway to ...

Unread postby Pops » Tue 10 Nov 2015, 11:28:45

I think so Ibon. I've said that it will be a chainsaw that uses the last drop of oil, lol. But then I've always been more optimistic than most that hang here. I believe that instead of going tits up, we will adjust. We'll pay more and work harder, but we wouldn't have gotten to this point if we were quitters.


Most of the oil we use does nothing more than heat the air, both literally and figuratively. Only a passing fraction has ever done profitable work. We've had so much oil we didn't need to be frugal, we just got a bigger truck.

It surprises me that there is not more discussion of conservation here, mostly either "We're Dead!" or "We're Saved!" I think most folks, whether they admit it or not, feel the same way as Cheney, our way of life is non-negotiable. Lots think/hope their neighbors are sheep awaiting slaughter when the negotiations fail.


Because the early oil was so easy we got the idea it really wasn't worth much and proceeded to waste it at every turn. The biggest addition to our energy reserves is a long time was increasing the CAFE standard along with the rest of the Energy Independence bill in '07 and Obama's acceleration of it in '12 or so. Put simply, those 2 actions increase the effective eROI of oil at the wheels significantly. Call it mROEI (Miles return on energy invested).

The energy derivedfrom finding new oil back when it seeped out of the ground was many hundreds of times the energy cost. Today the eROI (not to mention the economicERI) of discovering new oil - greater capacity - the marginal barrel, is down in the single digits. As is the cost of producing LTO and x-heavy/tar mining.

But excluding the search for new oil, eROI of existing, producing wells and identified locations is much higher. The resource is already identified, infrastructure is already in place. A new infill well isn't a slam dunk but it is certainly less risky than exploring the arctic I'd imagine. Which is why I have always discounted the argument that eROI means the oil biz will collapse in a heap next week. There is 100mbd of oil flowing right now th is not likely to stop overnight.

In the early days here the specter was of overnight collapse. But the reality, to this point at least, has been increasing cost and increasing conservation. If another drop of oil was never found, there are many hundreds of billions of barrels yet to be developed and extracted and more than likely billions more of reserve growth. The problem of course it they just aren't as easy as the first trillion.

But Marion already said that, lol.
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Re: The Stairway to ...

Unread postby hvacman » Wed 11 Nov 2015, 19:17:39

they will reduce their consumption and continue to buy what they can afford by increasing the utility they receive per unit*


Which is one reason why the automotive industry is ramping up hybrid and plug-in hybrids, along with all-electric vehicle research development, and even marketing. Example when even owners of a 5-year-old Chevy Volt can average 100 mpg simply by plugging in their vehicles to a standard 115 volt outlets every night, that is really increasing the utility per unit.
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