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The Etp Model, Q & A

Discuss research and forecasts regarding hydrocarbon depletion.

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Re: The Etp Model, Q & A

Unread postby Yoshua » Mon 09 Jan 2017, 16:26:21

The net energy is falling and with that the energy delivered to the economy. This should show up as falling energy consumption on the economy side.

I know that Southern Europe's energy consumption is down 20 percent since 2011-2012.
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Re: The Etp Model, Q & A

Unread postby onlooker » Mon 09 Jan 2017, 16:32:18

A price retreat of -2.10 . Will be interesting to watch how the rest of the week goes.
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Re: The Etp Model, Q & A

Unread postby vtsnowedin » Mon 09 Jan 2017, 17:18:30

onlooker wrote:A price retreat of -2.10 . Will be interesting to watch how the rest of the week goes.

Why just the week? To sort out the fundamentals from the hype of the day or week you will have to look at much longer term data looking for the trend.
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Re: The Etp Model, Q & A

Unread postby onlooker » Mon 09 Jan 2017, 17:29:18

True, the Etp calls for the moving yearly average to be below $54. So we can meet here around this time next year and acknowledge what transpired
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Re: The Etp Model, Q & A

Unread postby Cog » Mon 09 Jan 2017, 17:58:52

When you meet this time next year you can do the walk of shame.
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Re: The Etp Model, Q & A

Unread postby onlooker » Mon 09 Jan 2017, 18:01:10

Cog wrote:When you meet this time next year you can do the walk of shame.

ala Cersi, game of thrones? :-D
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Re: The Etp Model, Q & A

Unread postby vtsnowedin » Mon 09 Jan 2017, 18:13:33

Pardon my skepticism but I expect that if oil is at $60 or anything above that on January ninth 2018 all the Etp proponents here will have come up with some excuse why their $54 ceiling did not hold.
Time will tell.
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Re: The Etp Model, Q & A

Unread postby shortonoil » Mon 09 Jan 2017, 18:27:49

@tagio
"If I may beg your indulgence, sometime recently you posted a list of the things that the ETP model successfully predicts and "explains,""

I remember the post. I don't save the links, but I save the posts. I'll look it up, and repost it here tomorrow.

"At that point more than half the produced oil must be "bought" by the industry for its operations. "

The industry does not have to buy the oil, but they do have to buy the "energy" that it provides. That can, and does come from a variety of sources, but all those sources required oil to provide that energy. So in essence they are buying back their own "oil"; if you consider oil as an energy source, and not black stuff in a barrel. And yes, it is deflation (at $2.7 trillion per year) and that is why the Central Banks must print huge volumes of currency to replace what the system is destroying. If they didn't there would soon be insufficient currency in the system for it to continue operating. It is part of the cannibalization process that must take place for production to continue. We are consuming our assets to produce oil, and that is most evident by the reserves that are being extracted, and are not and can not be replaced. Once they are gone we are going to be in serious trouble.

"ETP is not intuitive. Short, have I paraphrased you correctly? did I get that right?"

It won't be until you begin to think in energy terms rather than dollars. Dollars are confusing because they have no built in constraints. In dollar terms one could argue that the moon is made out of green cheese! They are an artificial construct with no limits; the world can always print up some more dollars; printing BTU is a little trickier!
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Re: The Etp Model, Q & A

Unread postby pstarr » Mon 09 Jan 2017, 18:41:49

shortonoil wrote:"ETP is not intuitive. Short, have I paraphrased you correctly? did I get that right?"

It won't be until you begin to think in energy terms rather than dollars. Dollars are confusing because they have no built in constraints. In dollar terms one could argue that the moon is made out of green cheese! They are an artificial construct with no limits; the world can always print up some more dollars; printing BTU is a little trickier!

I have always considered economy to be merely a rather vague measure of industrial ecology, money tracks natural capital movement and demand. I referred to it as net-energy analysis' aka EROEI. One of one several passions here at PO.com. I knew corn ethanol was a joke since before GW Bush's handout to his buddies at ADM and Cargill. One mbpd/days of wasted petroleum subsidy.

Thank you guys for ETP. It's another window into our tragic predicament.
Last edited by pstarr on Mon 09 Jan 2017, 18:50:32, edited 1 time in total.
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Re: The Etp Model, Q & A

Unread postby marmico » Mon 09 Jan 2017, 18:50:02

We are consuming our assets to produce oil, and that is most evident by the reserves that are being extracted, and are not and can not be replaced. Once they are gone we are going to be in serious trouble.


Dream on. BP's 2015 statistical review shows the world oil reserve-production ratio is 50 years, higher than in 1985.

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Re: The Etp Model, Q & A

Unread postby pstarr » Mon 09 Jan 2017, 18:52:17

Marmico, you understand rosy bullshit astronomical reserve measures depend on $100/barrel oil. At 50% it all evaporated.

Oil price will never again be high enough to produce those imaginary reserves. That oil will stay in the ground to feed the next generation of dinosaurs.
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Re: The Etp Model, Q & A

Unread postby shortonoil » Mon 09 Jan 2017, 19:54:02

"That oil will stay in the ground to feed the next generation of dinosaurs."

By our calculations it would presently take about $125/ barrel to get that oil out of the ground.

OK. Mr. Trump who is going to pay for that? Our old "buddies" the Saudi are going to be down to sand sandwiches real soon!!!!
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Re: The Etp Model, Q & A

Unread postby marmico » Tue 10 Jan 2017, 03:51:41

By our calculations it would presently take about $125/ barrel to get that oil out of the ground.

You don't know how much energy a refinery consumes per barrel processed, who cares what your curve fitting calculations say about extraction when you are flummoxed by the difference between average and marginal costs.

U.S. Geological Survey Assessment of Reserve Growth Outside of the United States

Image

https://pubs.usgs.gov/sir/2015/5091/sir20155091.pdf
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Re: The Etp Model, Q & A

Unread postby ralfy » Tue 10 Jan 2017, 06:12:29

I'd consider production cost rather than oil price.
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Re: The Etp Model, Q & A

Unread postby shortonoil » Tue 10 Jan 2017, 08:11:38

"I'd consider production cost rather than oil price."

Since reserves are the result of price, and production cost both must be known to determine the magnitude of the reserves. Since no one knows what the price is going to be in ten years most reserve estimates are stated as technically recoverable. It is sort of a government like approach to the question: "we will spend X amount of dollars and let someoe else worry about how it is going to get paid for".

Reserve growth is another one of those strange creatures based on an oxymoron. Reserves don't grow. They were put there several million years ago, and adding "oil fertilizer" to them is not going to make them bloom. They are a statement that IF the price were such, and such, and IF the production cost were such and such there would be THIS amount of oil. Reserves growth is the equivalent to "twinkle, twinkle little star" for the oil industry.

As to the graph above the EIA figures put the total accumulated production between 1960 and 2009 at 1004 Gb. Since the world was producing oil before 1960, and after 2009 we wonder were the USGS got their number of 795? Either the USGS has gone "battsy" or someone is making up imaginary numbers, and contributing them to the USGS. It looks like a case of very intentional deception is taking place, or the fake news perpetrators have gone permanently STUPID! Considering the source; its probably the latter!
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Re: The Etp Model, Q & A

Unread postby pstarr » Tue 10 Jan 2017, 11:24:58

marmico wrote:By our calculations it would presently take about $125/ barrel to get that oil out of the ground.

You don't know how much energy a refinery consumes per barrel processed

short knows how much energy is consumed per barrel by the refinery, pipelines, rigs and the rest. It's a bit more than one half the total petroleum energy produced.

marmico wrote:U.S. Geological Survey Assessment of Reserve Growth Outside of the United States

Image

https://pubs.usgs.gov/sir/2015/5091/sir20155091.pdf

Marmico, I just happen to know where those undisclosed resources are hiding, but I need some help to put together a package :wink: :wink: :roll: We need to talk money. You'll need a routing number. Ok? What's your email?
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Re: The Etp Model, Q & A

Unread postby Quinny » Tue 10 Jan 2017, 12:30:09

I'm supportive of the ETP model in principle and believe I understand the thermodynamics (toa certain extent).

I still don't understand the link to finance and the Maximum affordability function hence my previous questions about command economies. I am disappointed that the only responses I have had previously are basically put downs from the 'anti ETP' brigade.

If the dollar loses it's 'petrodollar' status and devalues, then surely that would 'break' the ETP price curve.

If not - why not?

I'm not an ETP knocker, and believe it helps explain some of the issues round the lack of serious price increases in what I believe is post peak.
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Re: The Etp Model, Q & A

Unread postby vtsnowedin » Tue 10 Jan 2017, 15:10:52

Quinny wrote:I'm supportive of the ETP model in principle and believe I understand the thermodynamics (toa certain extent).

I still don't understand the link to finance and the Maximum affordability function hence my previous questions about command economies. I am disappointed that the only responses I have had previously are basically put downs from the 'anti ETP' brigade.

If the dollar loses it's 'petrodollar' status and devalues, then surely that would 'break' the ETP price curve.

If not - why not?

I'm not an ETP knocker, and believe it helps explain some of the issues round the lack of serious price increases in what I believe is post peak.
This petro dollar change is over blown. As long as the USA produces eight to ten million Barrels per day and consumes twenty million barrels per day the price of oil traded in US dollars will be the benchmark. Other countries may conduct sales using their own currencies but both buyer and seller will always have an eye open to what the same deal could be transacted for in dollars and would baulk when they began to be taken advantage of.
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Re: The Etp Model, Q & A

Unread postby Quinny » Tue 10 Jan 2017, 15:26:53

The ? was if.
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Re: The Etp Model, Q & A

Unread postby tagio » Tue 10 Jan 2017, 18:07:45

Quinny,

Not sure if this is helpful, but as I understand it, the ETP model is a BAU model based on a unified world market for oil. At some point, enough of the oil industry will crash, or a major producer nation like Saudi Arabia will become a failed state, and the world market will fractionate. At that point, it is highly likely that the ETP model will cease to serve as a further guide to what is coming. Instead, each region will be governed by the unique set of conditions that govern the new, local market for that region. For many places in the world, that will be a death knell. Some regions however will have a remaining lease on life. It is here that forming relationships now might help. For example, if the U.S. and Russia enter into deals for oil, the U.S. might be able to secure more supply for itself after the Mideast goes kablooie, while Russia gains U.S. dollars with which it can continue to buy goods and services abroad. Similarly with respect to the deal between China and Iran. But there’s also the possibility that the U.S., even if relatively favorably positioned, will simply waste its remaining resources in fruitless wars to try to gain more oil because, you know, “the American life-style is non-negotiable.” The reality is that the remaining lease on life will have to be evaluated and assessed at that time based on the local market conditions and the relative sanity/insanity of the governing powers.

I suspect that HOPE motivates your question – namely, that with enlightened command and control rationing, we can obtain more/prolong our oil use and/or use it wisely to transition to a world that won’t have any oil in it. While this is perhaps theoretically possible, IMO it is foolish to expect or count on it. Keep in mind that what command and control really means is that the government will be able to pick the winners and losers. There is no guaranty that you and your family, particularly, will be among the favored or will be in a position to benefit. Limiting oil use to "essential functions" will destroy the rest of the economy. I don't see how you keep the new tens of millions suddenly unemployed and with no prospects pacified without something like guaranteed income or support, with draconian controls on movement of people and capital. It is possible that you will be among those locked in to an untenable situation with little freedom left to do anything. For example, assume that in order to maintain social control, and to limit costs of distributing food and energy across the entire U.S., the government offers the following “deal:” Go these cities, which will be the nodes for assuring the delivery of food and essential services, including heat, water, sewer service and electricity, and you will be taken care of while your government is solving the crisis. Once the crisis is over, you can go back home. (The crisis will assuredly be presented as just temporary, there is still so much oil in the ground, we just have to address the economic or political conditions preventing us from returning to BAU.) If you take the deal, you may be effectively controlled and locked in. I wouldn't be too eager or hopeful for a command and control “solution” – there is no reason to assume it will be administered in an enlightened manner with good will to all.
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