Donate Bitcoin

Donate Paypal


PeakOil is You

PeakOil is You

Is fast crash likely? Pt. 8

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

Re: Is fast crash likely? Pt. 8

Unread postby pstarr » Sat 13 Jan 2018, 14:06:56

onlooker wrote:See my linked article Pete a little bit before on this thread about the impending popping of the stocks, bonds and dollar bubbles

And don't forget the oil price bubble. Whoops! Back to the $35 historic norm. Back to Etp lol
/sarc
pstarr
NeoMaster
NeoMaster
 
Posts: 26767
Joined: Mon 27 Sep 2004, 02:00:00
Location: Behind the Redwood Curtain

Re: Is fast crash likely? Pt. 8

Unread postby Yoshua » Sat 13 Jan 2018, 14:52:35

The Arab Spring started in Tunisia in 2011. Tunisians are protesting and rioting again against rising gasoline prices and taxes, while unemployment and poverty levels are high. There are reports of government buildings and police stations that have been set a blaze. Seems that some people always have enough money to buy gasoline for a Molotov cocktail.
Yoshua
Intermediate Crude
Intermediate Crude
 
Posts: 931
Joined: Sat 28 May 2016, 05:45:42

Re: Is fast crash likely? Pt. 8

Unread postby pstarr » Sat 13 Jan 2018, 15:12:35

Yoshua wrote:The Arab Spring started in Tunisia in 2011. Tunisians are protesting and rioting again against rising gasoline prices and taxes, while unemployment and poverty levels are high. There are reports of government buildings and police stations that have been set a blaze. Seems that some people always have enough money to buy gasoline for a Molotov cocktail.

Every modern recession has been immediately preceded by rising demand and oil prices. There is no such correlation with any other commodity or market product. Corn drought does not cause recessions. There are ready substitutes for Doritos. Similarly shortages of intelligence are actually an economic stimulus. It sells more stuff like Teslas. :shock: 8)

Of course, causation can not be proved as there can be no controlled study that establishes causality between oil price and economic harm. Unless AdamB and Asgy are willing to be the subjects. Then we can prove once and for all whether their oil-futures gambits really did mean something.
/sarc
pstarr
NeoMaster
NeoMaster
 
Posts: 26767
Joined: Mon 27 Sep 2004, 02:00:00
Location: Behind the Redwood Curtain

Re: Is fast crash likely? Pt. 8

Unread postby vtsnowedin » Sat 13 Jan 2018, 20:38:25

pstarr wrote:Every modern recession has been immediately preceded by rising demand and oil prices..
NSS. (The last S stands for Sherlock.) The only times in the last 140 years that demand was not risen was after recessions and that has been few and far between. The years just before are always BAU with rising demand and often rising prices.
User avatar
vtsnowedin
Anti-Matter
Anti-Matter
 
Posts: 8317
Joined: Fri 11 Jul 2008, 02:00:00

Re: Is fast crash likely? Pt. 8

Unread postby asg70 » Sun 14 Jan 2018, 00:16:12

pstarr wrote:Every modern recession has been immediately preceded by rising demand and oil prices.


So what? Dot com crash had nothing to do with oil, for instance.
“If and when the oil price skewers for 6 months or more substantially above the MAP, then I will concede the Etp is inherently flawed"
--Onlooker, 1/1/2018
asg70
Light Sweet Crude
Light Sweet Crude
 
Posts: 1450
Joined: Sun 05 Feb 2017, 13:17:28

Re: Is fast crash likely? Pt. 8

Unread postby Yoshua » Sun 14 Jan 2018, 01:05:00

Tunisia is of course just a North African s***hole without oil or a global reserve currency, that imports more than they export and is therefore bleeding to death when oil prices rise.

But the trend seems to be clear enough anyway: High oil prices will cripple oil importing nations and low oil prices will cripple oil exporting nations. The problem today seems to be that there no longer is a goldilocks price since the cost to produce crude oil is on a rising trend.

Image
Yoshua
Intermediate Crude
Intermediate Crude
 
Posts: 931
Joined: Sat 28 May 2016, 05:45:42

Re: Is fast crash likely? Pt. 8

Unread postby Outcast_Searcher » Sun 14 Jan 2018, 03:30:07

Yoshua wrote:But the trend seems to be clear enough anyway: High oil prices will cripple oil importing nations and low oil prices will cripple oil exporting nations. The problem today seems to be that there no longer is a goldilocks price since the cost to produce crude oil is on a rising trend.

You've been a strong ETP proponent for months on this site.

The ETP claims to have been a very accurate predictor of oil prices for years, and is now saying oil prices will crash to roughly $2 within 4 years.

Yet the chart you just posted claims oil prices have been rising exponentially and the trend line is that they will continue to do so.

So what is it you are saying? Oil prices will be high, low, or you don't know?

And as for the dramatic cost rise to produce oil, that's been shown to be completely wrong on this site with real world numbers again, and again. (One of the reasons the ETP is nonsense -- it uses bogus claims like the cost of production now being over half the cost of oil for inputs and then claims inevitable trends from those).
Outcast_Searcher
COB
COB
 
Posts: 4395
Joined: Sat 27 Jun 2009, 20:26:42

Re: Is fast crash likely? Pt. 8

Unread postby Yoshua » Sun 14 Jan 2018, 05:17:42

There has been a close correlation between the cost to produce crude oil and the price of crude oil. As Rockdoc pointed out the oil and gas industry's ROI has been about 6% historically. Since the oil price is on a rising trend it's fair to conclude that the cost of producing oil is on a rising trend as well. It also makes perfect sense that the cost of production is rising as the oil industry moves to more challenging projects as ultra deep, heavy oil, LTO and to use EOR on conventional oil reservoirs.

After the Etp Model's Energy Half Way Point there no longer exists a goldilocks price on petroleum.After that point the petroleum producers will need a higher price for refined petroleum products than what the consumers can afford.

As the oil price now starts to rise higher, the weaker economies (sub prime economies) start to implode.
Yoshua
Intermediate Crude
Intermediate Crude
 
Posts: 931
Joined: Sat 28 May 2016, 05:45:42

Re: Is fast crash likely? Pt. 8

Unread postby Yoshua » Sun 14 Jan 2018, 05:47:28

WTI vs. CapEx

Image
Yoshua
Intermediate Crude
Intermediate Crude
 
Posts: 931
Joined: Sat 28 May 2016, 05:45:42

Re: Is fast crash likely? Pt. 8

Unread postby Outcast_Searcher » Sun 14 Jan 2018, 06:46:18

Yoshua wrote:
After the Etp Model's Energy Half Way Point there no longer exists a goldilocks price on petroleum.After that point the petroleum producers will need a higher price for refined petroleum products than what the consumers can afford.

Since the energy expended to produce a barrel of oil is under 5% (as has been repeatedly shown using basic economic facts) instead of the over 50% short is claiming, you can yammer on all you want, but it's empty noise. Plus the fact that with oil at nearly $100 for four years (2010 - 2014), global GDP advanced just fine, contrary to the claim that consumers can't afford oil at an average price of $41 in 2018, much less $2 in 2021.
Outcast_Searcher
COB
COB
 
Posts: 4395
Joined: Sat 27 Jun 2009, 20:26:42

Re: Is fast crash likely? Pt. 8

Unread postby Yoshua » Sun 14 Jan 2018, 07:16:39

Petroleum production includes: Extraction, refinery and distribution. Your 5% claim of energy cost is only enough to cover the cost to lift oil from the oil field. To lift oil you will first need to explore and develop an oil field and bring all the CapEx in place to start pumping. Refineries use 10% just to boil the crude. The refinery must be built before they can start boiling crude...again the CapEx must be in place. And since only 80% of the energy content in a barrel is turned into liquid fuels, the EROI of petroleum production can't ever have been higher than 5:1. And then another 5% is used to distribute the refined petroleum.

So maybe your 5% claim is an understatement to say the least?
Yoshua
Intermediate Crude
Intermediate Crude
 
Posts: 931
Joined: Sat 28 May 2016, 05:45:42

Re: Is fast crash likely? Pt. 8

Unread postby Yoshua » Sun 14 Jan 2018, 08:15:25

We don't live in 2010-2014 anymore. We have depleted the oil reservoirs by another 240G bbl since 2010. Depletion is an ongoing process. As you can see from the WTI vs. CapEx graph above, the WTI price could no longer support the increasing CapEx cost after 2012 (the same year the Etp Model claims that the Energy Half Way Point was reached). And just to make it clear: CapEx equals Energy. It takes energy to produce capital goods.

We live in a evolving space and time. The good news is that, as Rockman once pointed out, the oil industry has already explored, developed, put the CapEx in place and built the infrastructure when the energy was there to do it. Now the oil industry can just pump and boil oil until the machinery and infrastructure falls apart.
Yoshua
Intermediate Crude
Intermediate Crude
 
Posts: 931
Joined: Sat 28 May 2016, 05:45:42

Re: Is fast crash likely? Pt. 8

Unread postby rockdoc123 » Sun 14 Jan 2018, 11:51:48

Since the oil price is on a rising trend it's fair to conclude that the cost of producing oil is on a rising trend as well. It also makes perfect sense that the cost of production is rising as the oil industry moves to more challenging projects as ultra deep, heavy oil, LTO and to use EOR on conventional oil reservoirs.


not the case. The breakeven cost for all of the shale basins has dropped considerably over the past few years as reports from Rystad Energy and others have shown. Some of this is due to decreased service costs but much of it is due to improvements in supply chain management, drilling and completion technology and implementation. As oil price rises the break even costs will also rise (but not to the level they were previously) given manpower and service costs will increase as well. This is a pattern that has happened numerous times previously and will happen again.
User avatar
rockdoc123
Expert
Expert
 
Posts: 5665
Joined: Mon 16 May 2005, 02:00:00

Re: Is fast crash likely? Pt. 8

Unread postby vtsnowedin » Sun 14 Jan 2018, 12:05:15

Yoshua wrote:Petroleum production includes: Extraction, refinery and distribution. Your 5% claim of energy cost is only enough to cover the cost to lift oil from the oil field. To lift oil you will first need to explore and develop an oil field and bring all the CapEx in place to start pumping. Refineries use 10% just to boil the crude. The refinery must be built before they can start boiling crude...again the CapEx must be in place. And since only 80% of the energy content in a barrel is turned into liquid fuels, the EROI of petroleum production can't ever have been higher than 5:1. And then another 5% is used to distribute the refined petroleum.

So maybe your 5% claim is an understatement to say the least?

The facts are that crude last week cost 61.44/b or $1.464/gallon and the diesel and gas made from it sold for a weighted average of $1.882/gallon before fuel tax FOBNY Harbor. That 42 cents per gallon covers all energy used at the refinery plus capital cost of the refinery and wear and tear of all the equipment plus the profit margin for the refining company Your 80 percent figure and your 10 percent figure are both pure BS.
User avatar
vtsnowedin
Anti-Matter
Anti-Matter
 
Posts: 8317
Joined: Fri 11 Jul 2008, 02:00:00

Re: Is fast crash likely? Pt. 8

Unread postby Yoshua » Sun 14 Jan 2018, 12:33:32

Lower oil prices lead to lower production costs. Higher oil prices lead to higher production costs. Yes, that is true. Lower oil prices will also force the oil industry to lower its energy consumption.

And 42 cents of $1.882 is 22% ...and the liquid fuels energy content produced from each barrel equals 80% of the crude oil barrels energy content.
Yoshua
Intermediate Crude
Intermediate Crude
 
Posts: 931
Joined: Sat 28 May 2016, 05:45:42

Re: Is fast crash likely? Pt. 8

Unread postby vtsnowedin » Sun 14 Jan 2018, 12:46:03

Yoshua wrote:Lower oil prices lead to lower production costs. Higher oil prices lead to higher production costs. Yes, that is true. Lower oil prices will also force the oil industry to lower its energy consumption.

And 42 cents of $1.882 is 22% ...and the liquid fuels energy content produced from each barrel equals 80% of the crude oil barrels energy content.

Certainly not. It includes labor, management, deprecation, corporate taxes, dividends to stock holders, etc. The 20 percent you are looking for is other salable petroleum products lubricants, LPg and other gasses chemical plant feed stocks both liquid and gas and road asphalt cement (which can be used as fuel if need be.) There is no loss of volume at the refinery and in fact there is a gain due to many finished products having a lighter unit weight then the source crude which more then makes up for the volume of still gas that is used in the production. One last time a 42 gallon of crude oil is processed into 43 gallons of salable petroleum products. There is NO loss.
User avatar
vtsnowedin
Anti-Matter
Anti-Matter
 
Posts: 8317
Joined: Fri 11 Jul 2008, 02:00:00

Re: Is fast crash likely? Pt. 8

Unread postby Yoshua » Sun 14 Jan 2018, 13:16:16

One last time 1 bbl of crude oil contains 42 gallons and will produce 44.77 gallons of refined petroleum products. Count the energy content of the liquid fuels your self.

https://www.eia.gov/energyexplained/ind ... l_refining

Since the petroleum industry is part an energy producer and part a commodity producer it becomes very difficult to pinpoint exactly were and how much energy is consumed to produce energy. In fact I believe that the whole petroleum production process is soo complicated that it is impossible to calculate an exact number.

But hey, we got all the time in the world!
Yoshua
Intermediate Crude
Intermediate Crude
 
Posts: 931
Joined: Sat 28 May 2016, 05:45:42

Re: Is fast crash likely? Pt. 8

Unread postby vtsnowedin » Sun 14 Jan 2018, 18:46:39

Yoshua wrote:One last time 1 bbl of crude oil contains 42 gallons and will produce 44.77 gallons of refined petroleum products. Count the energy content of the liquid fuels your self.

https://www.eia.gov/energyexplained/ind ... l_refining

Since the petroleum industry is part an energy producer and part a commodity producer it becomes very difficult to pinpoint exactly were and how much energy is consumed to produce energy. In fact I believe that the whole petroleum production process is soo complicated that it is impossible to calculate an exact number.

But hey, we got all the time in the world!

As you have all the time in the world why don't you go to the EIA web site and read and understand (perhaps that is a bridge too far) all of their tables documenting the inputs and resulting outputs of the oil industry. If you actually read and understood all the data they present there you would Shut T## F**F up.
User avatar
vtsnowedin
Anti-Matter
Anti-Matter
 
Posts: 8317
Joined: Fri 11 Jul 2008, 02:00:00

Re: Is fast crash likely? Pt. 8

Unread postby donstewart » Sun 14 Jan 2018, 19:07:12

Art Berman on Shale
https://www.spreaker.com/user/ryanraysr/energy-week-9

Art says things which are directly contradictory to some of the comments in the preceding posts, and themes which are repeated here.
*The actual cost of producing oil has risen substantially since 2000. There is no more cheap oil.
*The cost of shale has declined, about 10 percent due to process improvements and 90 percent due to the depression in the oil patch
*A tiny number of shale companies are actually making money.
*When and if interest rates rise, much of the funding for the shale industry will dry up.
*Very light oils seem to be bumping up against the limits of global ability to use them

Don Stewart
donstewart
Intermediate Crude
Intermediate Crude
 
Posts: 760
Joined: Fri 16 Sep 2016, 03:37:24

Re: Is fast crash likely? Pt. 8

Unread postby rockdoc123 » Sun 14 Jan 2018, 19:19:32

Art Berman has zero credibility amongst people who actually work in the industry for a living. He has been proven wrong many times and his analysis (90% due to depression in the oil patch) flies in the face of presentations by numerous shale players (and those presentations must adhere to legal disclosure policies as set out by SEC and TSX).
And he is completely full of shit in regards to cost of producing having risen simply because the break even costs have gone down not up.
User avatar
rockdoc123
Expert
Expert
 
Posts: 5665
Joined: Mon 16 May 2005, 02:00:00

PreviousNext

Return to Peak Oil Discussion

Who is online

Users browsing this forum: No registered users and 28 guests