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The Coming Oil Flood

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The Coming Oil Flood

Unread postby dashster » Wed 18 Feb 2015, 08:28:41

I normally think of Yergin as the ultimate cornucopian, but Michael Lynch probably should have that title. He is coming out with a book this summer entitled: The "Peak Oil" Scare and the Coming Oil Flood

In the last decade, oil experts, geologists, and policy makers alike have warned that a peak in oil production around the world was about to be reached and that global economic distress would result when this occurred. But it didn't happen.


The peak didn't happen, but did we not see global economic distress and the highest prices ever (adjusted for inflation)? Perhaps not.

The "Peak Oil" Scare and the Coming Oil Flood refutes the recent claims that world oil production is nearing a peak and threatening economic disaster by analyzing the methods used by the theory's proponents. Author Michael C. Lynch, former researcher at Massachusetts Institute of Technology (MIT), debunks the "Peak Oil" crisis prediction and describes how the next few years will instead see large amounts of new supply that will bring oil prices down and boost the global economy.


It will be very interesting to see what large amounts of new supply he sees.

Editorial Reviews
Review
• Presents a cogent analysis that debunks the myths and exposes the agendas of those who promulgate the scarcity theory

• Supplies applied economic analysis—backed by well-informed research and proven analytical methodologies—by a scholar and researcher with real-world experience

• Explains how the extraction of crude oil from shale formations through hydraulic fracturing, or "fracking," should result in abundant long-term supplies with much greater geographical diversity, less political risk, and increased price stability

• Provides valuable insights into investing in the energy sector

Book Description
Oil, though finite, is in much better supply than many renewable resources.


On right-wing message boards (which includes the Wall Street Journal) you will see Peak Oil labeled as an agenda of the political left. It is partially tied in with environmentalism, but partly other liberal political ideology that I can't summarize. It will be interesting to see what agenda he sees by Colin Campbell, Jean Leherrere, etc.
Last edited by dashster on Wed 18 Feb 2015, 09:21:45, edited 1 time in total.
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Re: The Coming Oil Flood

Unread postby westexas » Wed 18 Feb 2015, 09:11:07

Following is an excerpt from an OpEd that Lynch wrote in August, 2009, where he predicted that oil prices would soon be back down to close to $30. Note that Brent averaged $80 in 2010 and $110 for 2011 to 2013 inclusive–for a four year average price in excess of $100 for 2010 to 2013 inclusive.

Based on Lynch’s track record and based on his current revised forecast for a $50 to $60 price (about twice his previous prediction), I suppose that we should expect an average Brent price of about $150 to $180 for 2016 to 2019 inclusive.

'Peak Oil’ Is a Waste of Energy
By MICHAEL LYNCH
Published: August 24, 2009

“Oil remains abundant, and the price will likely come down closer to the historical level of $30 a barrel as new supplies come forward in the deep waters off West Africa and Latin America, in East Africa, and perhaps in the Bakken oil shale fields of Montana and North Dakota. But that may not keep the Chicken Littles from convincing policymakers in Washington and elsewhere that oil, being finite, must increase in price.”


Link: http://www.nytimes.com/2009/08/25/opinion/25lynch.html?pagewanted=1&_r=3&emc=eta1
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Re: The Coming Oil Flood

Unread postby forbin » Wed 18 Feb 2015, 09:25:47

"...On right-wing message boards (which includes the Wall Street Journal) you will see Peak Oil label as an agenda of the left...."

Dunno why that is , are right wing Americans incapable of adding up ? ;-) ) just suits their purposes I guess

For all his protestations I failed to see Michael Lynch talking around the UK North Sea Oil production back higher than the 1999 peak. Full blown capitalism and state of the art tech also have failed to beat that year as well

extenders of field - that fine

re-naming resources so that they can be called "oil" , that's fine as well , just pushes the date forwards a tad of eventual peak ( probably renamed " Peak Burnable $h!t we now call Oil , or Peak BSO ( just peak BS ?? ))

A finite resource on a finite planet always increasing and never running out - must be selling snake oil

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Re: The Coming Oil Flood

Unread postby ROCKMAN » Wed 18 Feb 2015, 09:29:47

"...that global economic distress would result when this occurred. But it didn't happen." Hmm? I've estimated that the run up in oil prices in recent years has cost oil consumers an extra $1.2 TRILLION. I've got to think that has caused a wee bit of distress.
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Re: The Coming Oil Flood

Unread postby dashster » Wed 18 Feb 2015, 12:14:51

forbin wrote:"...On right-wing message boards (which includes the Wall Street Journal) you will see Peak Oil label as an agenda of the left...."

Dunno why that is , are right wing Americans incapable of adding up ? ;-) ) just suits their purposes I guess


I think it has something to do with protecting Business As Usual, or keeping government subsidies or expenditures from rising. Anything that goes against that is considered bad. One of their concerns is that the left is making it up in order to get the government to fund alternative energy. The other part I think is that the left is always seeing problems that aren't there - like global warming. There is also a feeling that there is plenty of oil, but government restricts oil companies from drilling in the places they can get it, like ANWR and a few offshore areas.

But anyone that is for Business As Usual should recognize that population growth prevents things from staying the same more than anything. But they are, to my frustration, in favor of population growth and immigration.
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Re: The Coming Oil Flood

Unread postby pstarr » Wed 18 Feb 2015, 12:49:38

With few exception (Iraq) the giant megafields of the past are in decline. Of the hundres of thousands of fields on the planet most of our oil came from a few giants such as Ghawar, North Slope, North Sea, Cantarell, etc. Increasingly we are compelled to searched out the difficult stuff, isolated, sub-par, small and the dry plays like Arctic, shale, oil sands etc. Private and national oil companies spend hundreds of billions of dollars searching out new oil fields in hope of replacing declining reserves, yet new discoveries lag further and further behind reservoir depletion.

It it only very rich places like the USA and Canada that can afford to tap into difficult expensive tar and shale. Much of the world is in recession because oil has become too expensive. Demand was destroyed, perhaps permanently by $100 oil. The current price slump will not last. Last time crude went from $147, down to $30, and back up to $100 in a few short years. This oscillation will surprise many, such is the nature of dis-equilibrium.

The North American tight shale renaissance requires specific conditions not found anywhere else on the planet; cheap credit, technical service companies and trained labor, abundant water for fracting, a network of well-developed roads and local pipelines (in farm fields from legacy oil development), a wealthy consumer class. We have yet to see the Bakken oil boom repeated elsewhere. It won't be.

I wouldn't give the book much credo. It can have no spine, no data, nothing. Don't expect any bombshells. Lynch, Yergin haven't discovered new field. The book will be poorly written, lacking references, a cheap hatchet job is the best you can expect. It will go away very quickly.
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Re: The Coming Oil Flood

Unread postby Pops » Wed 18 Feb 2015, 13:15:12

He couldn't spend too much time on it, it will only sell while the price of oil is in the toilet.
If destruction be our lot, we must ourselves be its author and finisher. As a nation of freemen we must live through all time or die by suicide.
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Re: The Coming Oil Flood

Unread postby Plantagenet » Wed 18 Feb 2015, 14:11:26

westexas wrote:... an OpEd that Lynch wrote in August, 2009, where he predicted that oil prices would soon be back down to close to $30.


The low in 2009 was US$32.70

Looks like Lynch got that one just right.

And here we are in an oil glut in 2015 with oil prices plummeting again, just as Lynch predicted.

Hmmm……..maybe we should listen a little more closely to Michael Lynch?
He's actually got a pretty good track record on his predictions. :idea:
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Re: The Coming Oil Flood

Unread postby Plantagenet » Wed 18 Feb 2015, 14:19:56

forbin wrote:"... right-wing ….. right wing Americans ...re-naming resources so that they can be called "oil"


Actually it was the left-wing Americans who redefined oil.

Please give credit where credit is due. The Obama administration and Ds now controlling the government are responsible for issuing new regulations that changed the legal definition of petroleum to include natural gas condensates.

NG condensates redefined as oil

Here's the operative phrase from this Obama administration document: "crude oil: Represents crude oil production on leases, including lease condensate. "

Get it now?

Cheers! :)
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Re: The Coming Oil Flood

Unread postby pstarr » Wed 18 Feb 2015, 15:14:15

Plant?
Image
Oil was never $30 in 2009, 2010, or 2011. Not in 2012 or 2013. Not even 2014. The Lynch/Yergin/Plant conspiracy has been unveiled finally.
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Re: The Coming Oil Flood

Unread postby westexas » Wed 18 Feb 2015, 15:34:57

Plant,

You are certainly one of the more interesting characters I have run into.

I guess you are right that Lynch, when he wrote his column in August, 2009 could look up the recent price data and observe that the WTI spot price averaged $39 in February, 2009:

http://www.eia.gov/dnav/pet/hist/LeafHa ... s=RWTC&f=M

Based on your approach, I guess I could say that I accurately predicted an average Brent spot price of $99 for 2014, by looking it up.

Actually, the more I think about it, the more I like your approach. The possibilities are endless, when one can claim credit, after the fact, for predictions by looking up historical data, but I digress.

When Lynch wrote his column, in August, 2009, WTI averaged $69, and as noted above, the average Brent price for 2010 to 2013 (and in fact for a five year period, 2010 to 2014) was slightly above $100, roughly three times his--forward looking--predicted price.

P.S. I predict that the New England Patriots will win the 2015 Super Bowl.
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Re: The Coming Oil Flood

Unread postby Plantagenet » Wed 18 Feb 2015, 15:48:50

pstarr wrote:Plant?
Image
Oil was never $30 in 2009, 2010, or 2011. Not in 2012 or 2013. Not even 2014. The Lynch/Yergin/Plant conspiracy has been unveiled finally.


Have you been smoking dope this morning, Peter? Your comment on this topic makes even less sense then your usual comments.

The plot you copied has been "smoothed"----i.e. the curve is based on a running average of data over a long time period---. The actual day-to-day price data is much more irregular, and your plot clearly doesn't show the price swings on single days. In other words the plot you've copied doesn't show the actual prices at all---its been smoothed.

To find out the actual prices you have to look at price data. Here is a US government table compiled by the EIA showing actual closing prices for oil over the last few decades

The tabulated oil price data

Now, if you look at the daily closing prices during 2009, you'll see that between Feb. 9 2009 and Feb. 25 2009 the price of WTI oil was continuously below $40/bbl, falling into the mid to low 30s on several days. The lowest price oil traded at during this period was just over $32 bbl --- just as I said.

I'm sorry Peter, but you're wrong again. My recommendation to you is that if the topic involves numbers that you button up and nod quietly and pretend you understand.

Cheers!
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Re: The Coming Oil Flood

Unread postby Plantagenet » Wed 18 Feb 2015, 16:00:38

westexas wrote:Plant,

You are certainly one of the more interesting characters I have run into.


Thank you, westexas. I enjoy your posts as well.

westexas wrote:I guess you are right that Lynch, when he wrote his column in August, 2009 could look up the recent price data and observe that the WTI spot price averaged $39 in February, 2009


Yup. Although Pstarr doesn't get it, I'm glad you acknowledge that oil prices did indeed drop down near $30 bbl in 2009.

westexas wrote:
P.S. I predict that the New England Patriots will win the 2015 Super Bowl.


I think you are right---that might actually happen.

Many biblical scholars think that the "predictions" of Jesus in the new testament and the various prophets in the Old testament in the Bible were actually written centuries after the events they were supposedly predicting. Lynch seems to be adhering to this venerable biblical tradition.

How about this---I predict that oil prices will tumble in late 2014 and early 2015 due to an "oil glut.

Hey --- this prediction stuff isn't so difficult after all!

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Re: The Coming Oil Flood

Unread postby pstarr » Wed 18 Feb 2015, 16:01:27

Plantagenet wrote:Now, if you look at the daily closing prices during 2009, you'll see that between Feb. 9 2009 and Feb. 25 2009 the price of WTI oil was continuously below $40/bbl, falling into the mid to low 30s on several days. The lowest price oil traded at during this period was just over $32 bbl --- just as I said.
Cheers!

Sure Plant, I stared real closely at the daily closing prices between Feb. 9 2009 and Feb. 25 2009 and oops! You're right. My wrong. :razz:
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Re: The Coming Oil Flood

Unread postby Subjectivist » Wed 18 Feb 2015, 16:13:06

Part of really wishes this were true, wishes that we could turn the clock back 15 years to when things were looking up economically and every time we needed more oil someone would jst drill a well and sell it to us for $20/bbl.

The part of me that fears climate change is less thrilled with what we would do to Earth if we had more decades of cheap oil to burn.
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Re: The Coming Oil Flood

Unread postby shallow sand » Wed 18 Feb 2015, 17:29:02

Lynch is a perma-bear on crude prices, which in the last 20 years means he has been right sometimes and wrong sometimes. Just like the perma-bulls have been right sometimes and wrong sometimes. However, he has primarily been wrong more than right based on the price action in the past 15-20 years.

Since 1997 we have sold oil at the wellhead from $8 to $140. Funny thing, we are around $50 right now. Prior to 2005, $50 was unheard of on the high side. Ten years later, it is considered too low to support most exploration in the United States.

There may be a flood of $150 oil, $50 flood remains to been seen, but I would not bet on it. I wonder what the shale co. ceo's would say about the future of their businesses if they were told WTI sub $60 will be the reality for the next ten years? Better yet, I wonder what all of those who have lost their jobs in the shale carnage would think about abundant supplies of $50-60 WTI?
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Re: The Coming Oil Flood

Unread postby PeakOiler » Wed 18 Feb 2015, 19:06:10

pstarr wrote:
Plantagenet wrote:Now, if you look at the daily closing prices during 2009, you'll see that between Feb. 9 2009 and Feb. 25 2009 the price of WTI oil was continuously below $40/bbl, falling into the mid to low 30s on several days. The lowest price oil traded at during this period was just over $32 bbl --- just as I said.
Cheers!

Sure Plant, I stared real closely at the daily closing prices between Feb. 9 2009 and Feb. 25 2009 and oops! You're right. My wrong. :razz:


pstarr and Plantagenet: The daily WTI prices are available via the link that I always have in the PO.com Oil Price Challenge spreadsheet.
Here's the link again: http://www.eia.gov/dnav/pet/pet_pri_fut_s1_d.htm

One can download the Excel workbook, and on the "DATA 1" tab, look at column B for the daily closing prices. Row 6456 (December 19, 2008) shows WTI closed at $33.87.
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Re: The Coming Oil Flood

Unread postby Plantagenet » Wed 18 Feb 2015, 19:22:42

PeakOiler wrote: The daily WTI prices are available via the link that I always have in the PO.com Oil Price Challenge spreadsheet.
Here's the link again: http://www.eia.gov/dnav/pet/pet_pri_fut_s1_d.htm


Thanks PeakOiler.

Your link shows an EIA database of future contact prices. I used the EIA database of SPOT prices, i.e. the actual price of oil bought and sold on a particular day. The two are very similar, but not identical.

Here's the link to the database I used EIA database of historical spot prices for oil

Cheers!
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Re: The Coming Oil Flood

Unread postby dashster » Wed 18 Feb 2015, 21:14:40

Pops wrote:He couldn't spend too much time on it, it will only sell while the price of oil is in the toilet.


Imagine if oil is $100 when it comes out in July.

He is definitely sticking his neck out. An article in Forbes or the New York Times where he makes an optimistic prediction is going to quickly fade from the scene. But that book will be a lot more noticeable and hang around a lot longer. I don't think Yergin has done any cornucopian books. It looks like Yergin has written at least four, and two concern oil, but I know one is historical, not sure if the other expresses cornucopian views.
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Re: The Coming Oil Flood

Unread postby copious.abundance » Wed 18 Feb 2015, 21:32:55

westexas wrote:Based on Lynch’s track record and based on his current revised forecast for a $50 to $60 price (about twice his previous prediction), I suppose that we should expect an average Brent price of about $150 to $180 for 2016 to 2019 inclusive.

Before westexas spends any time worrying about Lynch's track record, he might want to spend a good deal of time worrying about his own.

Wed Jul 10, 2013
westexas wrote:Note that the following recent article posted on Peakoil.com is on point:

The Shale Oil Revolution Is Already Ending And Oil Prices Are Going To Surge
http://peakoil.com/production/the-shale ... g-to-surge
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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