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The ETP model was wrong - But is there a top for oil prices?

Discuss research and forecasts regarding hydrocarbon depletion.

Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Yoshua » Tue 15 May 2018, 00:41:09

A fmr head of the BIS has been talking about that the third leg in the global financial crisis will will come when the EM markets crash.

The financial crisis 2008
The euro crisis 2012
The EM crisis ?

Some EM seems to be on the brink of crashing today with collapsing currencies and default risks. IMF is also talking about it today.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Yoshua » Tue 15 May 2018, 00:58:32

OS... spacetime is not static.

It took $150 oil to crash the dollar in 2008.
It took $100 oil to crash the euro in 2012.
It takes $70 oil to crash the EM in 2018?
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Observerbrb » Tue 15 May 2018, 06:21:51

Yoshua wrote:OS... spacetime is not static.

It took $150 oil to crash the dollar in 2008.
It took $100 oil to crash the euro in 2012.
It takes $70 oil to crash the EM in 2018?


I am afraid that an EM collapse will turn several nations into failed states.

As someone who travels to South America and has contact with South American people, I would say that the situation is becoming dire in some countries. The level of polarization and hatred is surpassing levels not seen since many decades ago - I think we could be on the verge of serious civil disorders in Brazil, Argentina or Mexico. Not so sure how this will affect the rest of the world.

The Latin Spring could be on our doorsteps.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby marmico » Tue 15 May 2018, 06:36:20

Yoshua is a Hills Group groupie. Yoshua was buying triple inverse oil ETFs in 2016 hands over fists on the recommendation of Bozo BW Hill who at that time was pretending to be an asset manager when ETP sales were in a lull.

Yoshua is financially broke.

It took $150 oil to crash the dollar in 2008.


Huh.

Image

So oil was $10 nominal WTI in 1998 and the trade weighted dollar index was 115 and oil is $70 nominal WTI in 2018 and the dollar index is 120.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Observerbrb » Tue 15 May 2018, 06:54:27

marmico wrote:Yoshua is a Hills Group groupie. Yoshua was buying triple inverse oil ETFs in 2016 hands over fists on the recommendation of Bozo BW Hill who at that time was pretending to be an asset manager when ETP sales were in a lull.

Yoshua is financially broke.


Did you go "long-on-oil" marmico? :lol:
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby marmico » Tue 15 May 2018, 07:38:48

Did you go "long-on-oil" marmico? :lol:


No. But why does it matter?

How many times do I have to do the Jane Chardonnay in 2018 and the JoeSixPack in 1992 chart when it comes to hours worked to buy 10 gallons of gasoline. Why don't you adjust Joe and Jane's hours for fuel efficiency? Jane buys the 2018 Corolla and Joe bought the 1992 F-150.

Image

As a separate matter, US energy consumption per capita is the same as it was 50 years ago. I will project that in 2025 US energy consumption per capita will 20% less than it was in 1975. Are you a taker?
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Observerbrb » Tue 15 May 2018, 08:56:40

marmico wrote:
Did you go "long-on-oil" marmico? :lol:


As a separate matter, US energy consumption per capita is the same as it was 50 years ago. I will project that in 2025 US energy consumption per capita will 20% less than it was in 1975. Are you a taker?


I think it could be a reasonable situation, why not?
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Cog » Tue 15 May 2018, 09:00:25

I went long on oil at $40/bbl. Should I give the money back now?
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Outcast_Searcher » Tue 15 May 2018, 12:17:36

Yoshua wrote:OS... spacetime is not static.

It took $150 oil to crash the dollar in 2008.
It took $100 oil to crash the euro in 2012.
It takes $70 oil to crash the EM in 2018?


Oil wasn't the primary thing that caused the 2008 financial crisis, as anyone who can read should know.

There was a HELL of a lot going on in Europe besides oil prices in 2012. Why didn't $100 oil bother the global economy in 2010, 2011, 2013, or 2014, pray tell?

The Emerging markets have been highly volatile for a long time. Why pick 2018? Oh, because it fits your timeframe -- constant doom in our face. Got it, but given your track record, well, good luck with that plan.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Outcast_Searcher » Tue 15 May 2018, 12:22:57

Cog wrote:I went long on oil at $40/bbl. Should I give the money back now?

Congrats! Now the only issue is deciding when to sell. That's a great position to be in.

Just think. In 2015 / 16, all the popular talk was that oil might NEVER get expensive again. Now here we are, and the popular meme is worrying how bad things might get, with $100 oil being bandied about much more frequently than just recently.

Naturally, many of the fast crash clowns crowing about financial doom from low oil prices just a couple/few years ago will be back into the mode of constantly proclaiming near term doom from higher oil prices. After all, that's what they do. (And constantly taking themselves seriously, to boot.)
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Observerbrb » Tue 15 May 2018, 12:28:45

Cog wrote:I went long on oil at $40/bbl. Should I give the money back now?


My humble opinion is to sell around 90$. But you know better than everyone.

If you don't truly believe that there is a top for oil prices before causing a significant slowdown, you should wait until the price reaches 90$.

Why? Because this is OPEC target price. They are not interested in higher prices and KSA wants to get the maximum benefit from Aramco IPO. I guess OPEC has additional spare capacity and US Shale oil can also provide some relief.

On the other hand, the situation in Venezuela is putting 1.5 mbd at risk and sanctions on Iran can also withdraw another 0.5-1 mbd from the market.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Outcast_Searcher » Tue 15 May 2018, 12:30:02

marmico wrote:Yoshua is a Hills Group groupie. Yoshua was buying triple inverse oil ETFs in 2016 hands over fists on the recommendation of Bozo BW Hill who at that time was pretending to be an asset manager when ETP sales were in a lull.

Yoshua is financially broke.

If the fast crash financial doomers invested consistently with their frequent bad predictions, no doubt that as a group, they'd be in SAD financial shape.

Maybe that's why they're so angry about being wrong, seemingly all the time?

They sure don't get embarrassed easily no matter how often they're dramatically wrong.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Outcast_Searcher » Tue 15 May 2018, 12:41:12

marmico wrote:Image

So oil was $10 nominal WTI in 1998 and the trade weighted dollar index was 115 and oil is $70 nominal WTI in 2018 and the dollar index is 120.

The "crashing" dollar is another humorous meme from the fast crash doomers. If one looks at the dollar over time compared to other fiat currencies in general, it's remarkably stable.

But there's frequently cherry picked date ranges of a few months to a year or so, and then trying to prove that X is destroying the dollar. Expanding the timeframe is an excellent way to expose that tactic as nonsense.

...

Shorty kept talking about the dollar being toilet paper, etc. last year as part of his desperation to make the case that he was about to be proven right re global economic collapse vindicating his ETP MAP predictions.

And yet, here we are with the DXY only down about 5% since a year ago and up a few percent in 2018.

Of course, now with the dollar rising, we get to hear how this must mean the imminent demise of the entire emerging market space. How surprising. :roll:
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Outcast_Searcher » Tue 15 May 2018, 12:48:35

Observerbrb wrote:
Cog wrote:I went long on oil at $40/bbl. Should I give the money back now?


My humble opinion is to sell around 90$. But you know better than everyone.

If you don't truly believe that there is a top for oil prices before causing a significant slowdown, you should wait until the price reaches 90$.

Why? Because this is OPEC target price. They are not interested in higher prices and KSA wants to get the maximum benefit from Aramco IPO. I guess OPEC has additional spare capacity and US Shale oil can also provide some relief.

On the other hand, the situation in Venezuela is putting 1.5 mbd at risk and sanctions on Iran can also withdraw another 0.5-1 mbd from the market.

OTOH, good luck predicting the future, especially re oil prices, which is one lesson that folks on this board for years should have learned from the annual oil price challenges.

(We had a few folks with very good results multiple times, whose advice is likely worth considering). And no, I'm certainly NOT one of them, with frequent mediocre results. :)

I'm always amused by the financial press throwing out constant detailed predictions on oil prices with a straight face. And being proven wrong almost constantly. What a way to make a living.

There are free pseudo-random number generators, after all. :!:
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby pstarr » Tue 15 May 2018, 13:40:53

Not one of you snarky trolls are qualified to even say "ETP". You have no idea what it is about. Ask our resident petroleum geologists if they can explain it to you?

Hint: they have no clue either. Neither RM nor Rockdoc
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby jedrider » Tue 15 May 2018, 13:57:52

I didn't even remember what ETP is all about, so I looked up this (also refers to the original paper on ETP, evidently)j:

http://peakoilbarrel.com/on-the-thermodynamic-model-of-oil-extraction-by-the-hills-group/

ETP, I guess is one thing (i.e. Total Production Energy, or Energy net of Total Production). But, what is the MODEL?
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby ROCKMAN » Tue 15 May 2018, 14:48:59

"....they have no clue either. Neither RM nor Rockdoc." Well, that's certainly true in the Rockman's case. I've seen countless explanations of what the model is projecting and details of those projections. But not once have I seen the actual model presented here. The Rockman has analyzed thousands of models in his career (mostly economic models). But in every one of those situation saw the actual structure of the model and assumptions used to calculate the details. With that I can judge the validity of a model. One cannot do that strictly by looking at the results of a model. One might agree or disagree with those results. But until one sees how it is structured one cannot bless it even if one agrees with the results. That would be interlectually dishonest.

FYI: most models fail not because of a poor structure but do to making incorrect assumptions used in the models input. IOW the simple model X = 20 = Y will never generate a valid result if unrealistic value are chosen.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Outcast_Searcher » Tue 15 May 2018, 14:50:33

jedrider wrote:I didn't even remember what ETP is all about, so I looked up this (also refers to the original paper on ETP, evidently)j:

http://peakoilbarrel.com/on-the-thermodynamic-model-of-oil-extraction-by-the-hills-group/

ETP, I guess is one thing (i.e. Total Production Energy, or Energy net of Total Production). But, what is the MODEL?

My only "scientist" credentials are in computers. Searching on things like ETP, it's hard to find the paper explaining the theory, unless you want to pay for it on BW Hill's ETP website.

So I'll give a brief layman's summary of some high points, based on my perusal of the 2nd edition of the paper, which I found through some link on a site like this or The Oil Drum, etc.

The main idea was that the net usable energy from extracting oil was going to become so tiny that it would become economically infeasible to produce oil REAL SOON NOW.

The MAP, or "Maximum Affordable Price" of oil was supposed to be a key result of the ETP theory, and a demonstration of global financial collapse REAL soon now.

Examples: A couple of threads on this site documenting the WTI price vs. the ETP MAP forecast of oil averaging $41 a barrel for 2018 being impossible economically. And, eyeballing the MAP forecast chart on page 34 of V2 of his paper, his price forecast was for roughly $26 in 2019, $13 in 2020, and $2 in 2021.

So unless you believe that oil will be almost completely without value to the world by 2021 because it will take "too much" energy to produce it profitably, the key takeaway is that the ETP theory has failed, re forecast prices. Due to this, his general forecast was for short term almost total economic collapse. In other words, another theory for short term economic doom.

The author made the claim the core issue was thermodynamics. But he used lots of assumptions that various scientists and people with a little economics pointed out were ludicrous. The one I tended to harp on was he IGNORED DECADES OF INFLATION when calculating the cost of a BTU of energy from oil. The vast majority of his charted increase of the cost of a BTU of energy from oil was rising dramatically was from ignoring inflation for a good 5 decades. When people like me pointed that out, he resorted to lots of ad homs, but would never actually address the issue.

Scientists would (on other sites) refer to errors in his calculations or assumptions re thermodynamics (beyond the scope of my knowledge and schooling). I never saw meaningful responses from him re those criticisms, though.

As folks like Rockman on this site have repeatedly pointed out, real world oil businesses don't worry explictly about EROEI at all. They look at economic feasibility and projected profits for a project.

I kept a copy of V2 of the paper on my PC, dated March 1, 2015, which I can refer to. Sorry if this wasn't any help. It was just off the top, based on my recollections.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby radon1 » Tue 15 May 2018, 16:26:26

jedrider wrote:I didn't even remember what ETP is all about,


In broad terms, he took some dusty student-time thesis exploring the behaviour of liquids at the immediate vicinity of a well head, declared that the energy content of those liquids is equivalent to money and that the entire universe is situated at the immediate vicinity of this well-head, and then on this basis proclaimed that the universe will run out of money along the curve outlining the energy content dissipation.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby ROCKMAN » Tue 15 May 2018, 17:23:33

Outcast - "...he IGNORED DECADES OF INFLATION...". Good point. Exactly what I meant: every model involves a number of mathematical assumptions. If those assumptions are unrealistic then it damages the model's credibility even if it's structure is sound.
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