The Export Land Model

[AirlinePilot]

As JD pointed out producers don't accelerate consumption as they go into decline - that's beyond absurd, the populace don't collectively decide to ramp up the party when they hear the news. It has nothing to with real world examples, of course. UK consumption increased only 5.94 kb/d on average 1999-2005, when their production went into decline. In many years demand contracted sharply, check the BP data.

I think part of what you may be missing with this is the fact that as oil prices rise, producing nations (specifically the top 5) tend to do better economically due to the increased revenue and the industry expenditure as a result of that. I don't know how one measures that but to me it's intuitive.

[shortonsense]

Just as PO did 5 years ago. And now that it has been revealed that the claimed effects of that event were pretty much a bust, now its time to manufacture something else to get excited over.

Your continued observance of some doomer prognostication is completely against the grain of what most of us here think will be the actual effects of Peak Oil.

If you do not like the predictions of Deffeyes, Ruppert and Simmons feel free to tell them about it, I just notice the claim, and them being the Prophets they used to have quite a bit of credibility.

As far as against the grain of what peakers think, I have news, you aren't the only peakers, and quite a few at this site have referenced all sorts of things as PO effects which certainly have not happened. And some experts have proclaimed some terrible things and you know it. The fact that they don't say it ANY MORE is very telling...sort of hard to proclaim that peak oil will stop walmart trucks when A) its happened asccording to the Prophets and B) the walmart trucks still run.

It is not my fault that I notice what was claimed, and what has happened, and I certainly don't limit my view to only what the few regulars here think NOW.

You also are in error in stating that PO was 5 years ago. There has been no general consensus yet that we have even peaked. Incorrectly pointing to the histoirc variations in countries/fields/or global production does not make it so.

Again, I am only referencing the Prophets. Tell it to Deffeyes, Simmons and Ruppert, all of whom claim peak was 2005.

How can the "claimed events" have busted if we haven't peaked yet? You got a logic problem with that with your misunderstanding of what THE peak is.

Tell it to Deffeyes, Simmons and Ruppert...its THEIR claim...I simply notice and reference it appropriately. I'd throw in Lundberg, but he doesn't seem to have as much Peaker street cred and the Prophets.

[shortonsense]

I think part of what you may be missing with this is the fact that as oil prices rise, producing nations (specifically the top 5) tend to do better economically due to the increased revenue and the industry expenditure as a result of that. I don't know how one measures that but to me it's intuitive.

Chavez doesn't seem to be making this intuitive theory of yours work very well. While he certainly did pretty well while prices were increasing, he hasn't done so well when the natural and completely expected reaction ( demand destruction ) clobbers his revenue stream.

They don't call it the resource curse for nothing.

[GoghGoner]

Khebab blog post from March 2006 on Mexico's oil export future:

Mexico's Ability to Export Oil

Khebab was overly optimistic. Mexico's exports dropped by 22% in 2008 alone. Most people see a prediction that global oil supply is going to drop by 2-3% a year and do not consider that drop is going to affect only the importing countries -- that is why the importance of ELM cannot be understated. As Mexico's exports slide to zero over the next couple of years they are in for real trouble with their government budgets.

We can observe that the oil exports are expected to go down by 2006-2007. The fraction of oil exports may fall below 40% after 2015 (Figure 10) and the US could lose an important and reliable source of oil imports (92% of Mexico's exports are for the US).

Energy Export Data Browser

[AirlinePilot]

I think part of what you may be missing with this is the fact that as oil prices rise, producing nations (specifically the top 5) tend to do better economically due to the increased revenue and the industry expenditure as a result of that. I don't know how one measures that but to me it's intuitive.

Chavez doesn't seem to be making this intuitive theory of yours work very well. While he certainly did pretty well while prices were increasing, he hasn't done so well when the natural and completely expected reaction ( demand destruction ) clobbers his revenue stream.

They don't call it the resource curse for nothing.

Well Gee no kidding? That sort of thing tends to happen when you have a crazy person leading your communist country.
I'd suggest that he will see the error of his ways soon and allow for more foreign involvement, especially China. Their oil WILL
be bought by someone and prices are likely to go higher in the future.

I'd say its basic economics, at least on a macro scale, that as the price paid for a resource climbs, a producing nations economy(especially one so driven by oil) will heat up. it follows that internal consumption will also grow, even if its at a low rate, there will still likely be growth. Pointing to Chavez as an example I'd call a serious anomaly, a short term issue, and far from the norm.

[MD]

Again, I am only referencing the Prophets. Tell it to Deffeyes, Simmons and Ruppert, all of whom claim peak was 2005.

What peaked was only a component of the energy mix.

Its ever increasing cost will finally allow alternatives to flourish.

Opportunities abound!

Of course at the same time many economies and lives will be disrupted. Some for better, some for worse.

Which group are you in?

[shortonsense]

They don't call it the resource curse for nothing.

Well Gee no kidding? That sort of thing tends to happen when you have a crazy person leading your communist country.

Chavez isn't crazy, and his country isn't communist. He has simply fallen into a pretty standard problem of those who think they can beat basic economics.

Controlling the largest oil pool on the planet does make him relatively important, in the geopolitical world.

I'd say its basic economics, at least on a macro scale, that as the price paid for a resource climbs, a producing nations economy(especially one so driven by oil) will heat up. it follows that internal consumption will also grow, even if its at a low rate, there will still likely be growth. Pointing to Chavez as an example I'd call a serious anomaly, a short term issue, and far from the norm.

Volume weight the examples by oil available to them, and Chavez is not an anomaly because he defines what matters...when the anomaly is the most important, it isn't an anomaly anymore. And the sheer volume available to him means on the topic of oil, his available resource will NEVER be a short term problem in this half of the century.

[shortonsense]

Again, I am only referencing the Prophets. Tell it to Deffeyes, Simmons and Ruppert, all of whom claim peak was 2005.

Of course at the same time many economies and lives will be disrupted. Some for better, some for worse.

Which group are you in?

I'm an early adopter, I pay more than its worth early just to see how a system/item/concept works.

Seriously, look at how this can play out in the US....Americans driving Volts, powered by household Bloom Boxes, running from all the natural gas we've got right here in this country. Throw in some wind, a few nukes, and let the Chinese have all the oil....let them deal with Saudi water cuts and deep water Campos basin exploration....and so on and so forth. Let them deal with higher internal consumption of exporting countries.

Has anyone consider small bloom boxes as power supplies with small CNG tanks in cars yet? Bloom Transport...I can see it coming.

[MD]

...
Has anyone consider small bloom boxes as power supplies with small CNG tanks in cars yet? Bloom Transport...I can see it coming.

Certainly. Just not as many.

[AirlinePilot]

Chavez isn't crazy, and his country isn't communist. He has simply fallen into a pretty standard problem of those who think they can beat basic economics.

I'd say Chavez is near certifiable. He's a megalomaniac, not very well educated, and is so socialist in his agenda you might as well be in a communist country if you live in Venezuela.

How do you reconcile his latest tidbit with the Earthquake weapon he claims we supposedly used against Haiti?

You gotta love the Parrot!!!

chavez-parrot.jpg (19.04 KiB) Viewed 330 times

[shortonsense]

How do you reconcile his latest tidbit with the Earthquake weapon he claims we supposedly used against Haiti?

How dare you question the tectonic weapon! I will have you know that perfectly valid websites give it the same consideration that we give peak oil!!


Tectonic penetration missiles no less!! It must be true...its on the WWW!

http://uswgo.com/i-believe-the-incident ... weapon.htm

[GoghGoner]

I'd say its basic economics, at least on a macro scale, that as the price paid for a resource climbs, a producing nations economy(especially one so driven by oil) will heat up. it follows that internal consumption will also grow, even if its at a low rate, there will still likely be growth. Pointing to Chavez as an example I'd call a serious anomaly, a short term issue, and far from the norm.

We should not get hung up on whether consumption grows or not (I am not saying you are). The importance of ELM is that if X is producing 2 MBD (million barrel per day) and exporting 1 MBD then their production declines by 1 MBD their exports go to 0 MBD.

So exports drop by 100% when production falls by 50%, with consumption being flat.

[mcgowanjm]

I'd say its basic economics, at least on a macro scale, that as the price paid for a resource climbs, a producing nations economy(especially one so driven by oil) will heat up. it follows that internal consumption will also grow, even if its at a low rate, there will still likely be growth. Pointing to Chavez as an example I'd call a serious anomaly, a short term issue, and far from the norm.

Basic Economics fails on any level when talking
about Energy.

The price paid is totally linked to how much Energy
is expended to get the Energy from Source to Use.

EROEI

There is no way to Subsidize this Chain of Events.
Which is why Every Oil Watershed Event has been
Exactly Mirrored by a SocioEconomic Event of
Equal Proportion.

[mcgowanjm]

Tyler_JC

Post subject: Re: Short's argument thread
New postPosted: Wed Oct 21, 2009 5:27 am

Moderator

Joined: Sat Sep 25, 2004 7:00 am
Posts: 5371
Location: Boston, MA

The question must always be asked, expensive relative to what? Is oil expensive relative to wages? Gold? Pork bellies?

http://blogs.oilandgasinvestor.com/gues ... -20091.jpg

Note the MAGIC taking place at 1985. 1985 is The Year
when the US takes the Step past the Point of No Return.

1985 shows up repeatedly where 'And then, Johnny, a Miracle
occurred'. To 'Fix' the graph, merely take out the 3% 'of GDP'
Drop from 1985/86.

[AirlinePilot]

I'd say its basic economics, at least on a macro scale, that as the price paid for a resource climbs, a producing nations economy(especially one so driven by oil) will heat up. it follows that internal consumption will also grow, even if its at a low rate, there will still likely be growth. Pointing to Chavez as an example I'd call a serious anomaly, a short term issue, and far from the norm.

We should not get hung up on whether consumption grows or not (I am not saying you are). The importance of ELM is that if X is producing 2 MBD (million barrel per day) and exporting 1 MBD then their production declines by 1 MBD their exports go to 0 MBD.

So exports drop by 100% when production falls by 50%, with consumption being flat.

Agreed. I think its also important to note that since we may not "technically" have peaked Net Oil issues wont be really unmasked except on a small scale until we actually see global declining production. Depending on who you listen too that may or may not be happening now. I tend to believe we are on the cusp of this presently.

Another thing to address is once this becomes evident to what extent do exporting nations begin to hoard? Does that even happen? We reach some sort of crossover point where it becomes even more lucrative to do that in a world declining production situation. In effect the big end users (importers) become hostages of their use.

[gollum]

What isn't discussed much, is the tendency that net exporters will probably have to hoard their oil when it becomes apparent the oil will be worth more in the future as peak oil becomes more apparent.

[Graeme]

Another Take On Peak Oil: Exports, Not Production, Indicate Crisis

According to Brown’s ELM analysis from 2008, net oil exports from the world’s top five producers have already peaked. A graph supporting this fact showed the price of oil against the average annual net oil exports from Saudi Arabia, Russia, Norway, Iran, and the United Arab Emirates. As prices rose, these countries’ cumulative net oil exports also rose—presumably out of the desire to cash in one increasing demand indicated by higher prices. But in 2005, crude oil exports from these countries dropped sharply. The decline continued even as prices skyrocketed on their way to the all-time peak of $147 per barrel in July of 2008.

heatingoil

[AirlinePilot]

ELM is evolving...westexas over at TOD has this post today....

"ELM 2.0 takes into account Chindia's rapidly increasing net oil imports, which went from 4.6 mbpd in 2005 to 6.0 mbpd in 2008 (EIA), a rate of change of +9.0%/year. Extrapolated out to 2010, they would be net importing about 7.2 mbpd. Expressed as a percentage of net exports from the (2005) top five net exporters, Chindia's net imports increased from 19% of the top five in 2005 to 27% in 2008, to a projected 33% in 2010. One can see where the trend is headed, as combined net exports from the (2005) top five showed a -2%/year rate of change, from 2005 to 2008.

But let's look at the Net/Net Exports from the top five, after subtracting out Chindia's net imports. In 2005, the Net/Net (2005 top five) number was about 19.4 mbpd. Assuming 22 mbpd Net Exports from the top five in 2010, and assuming 7.2 mbpd net imports into Chindia, the Net/Net number would fall to 14.8 mbpd in 2010.

Now, Sam's best case for the (2005) top five is that their net exports would be down to about 15 mbpd in 2018, and if we extrapolate Chindia's net imports, they would be approaching 15 mbpd in 2018, resulting in a projected Net/Net number of zero. If we do some "Cowboy Integration" (19.6 mbpd X 365 Days X 13 years X 0.5), it suggests that estimated post-2005 Net/Net Top Five Cumulative Exports are about 46 Gb. At the end of this year, the projected remaining Net/Net (2005) Top Five Cumulative Exports would be down to about 22 Gb, a five year Net/Net depletion rate of 15%/year. This is ELM 2.0."

Or more simply put......

Several Points: (1) Saudi Arabia is increasingly favoring China & India as their prime customers, with the US fading fast; (2) The (2005) top five account for about half of global net oil exports; (3) Closer to home, in the bottom half of 2005 net exporters, combined net exports from Canada, Mexico & Venezuela dropped by 20% in just four years, from 2004 to 2008; (4) The crux of the ELM 2.0 argument is that developing countries will continue to outbid developed countries for declining oil exports.

IMO, if my original post above isn’t just about the scariest thing that you have ever read, you don’t fully understand the problem.

Let’s try it this way. If we extrapolate recent trends, Chindia’s net imports in 2018 (eight years from now), expressed as a percentage of combined projected net exports from the (2005) top five net exporters, will be approaching 100%, leaving nothing for non-Chindia oil importers.

Now I understand that recent trends may not hold, but we all know how growing third world demand is going to be a problem. This is alarming stuff and why ELM is so important an issue to grasp.

[AirlinePilot]

The effect of ELM 2.0 on US imports since 2006

[pstarr]

AP. Westexas's ELM summary , next to that chart , is very scary.