[yesplease]

"EVs will be introduced gradually"

Right, that's what I just said. Somehow you seem to find that comforting. Do you think oil depletion is going to happen at a nice, stready, gradual pace? It may, but the people in the field are saying that every trick in the book has already been used to lengthen the plateau, so now when it crashes, its going to crash fast and hard.

I don't see any indication it's going to crash fast and hard. While it certainly is profitable to insure some measure of conspicuous consumption, I doubt there would be any point to a "crash" in the sense that it has around these forums since profit would also "crash". That's not even looking at common sense limitations on oil production, eg refinery capacity, which for a company involved in oil has to be maximized in order to justify a decent ROI. Either oil production will plateau, or lots of new refineries would only operate for months maybe a few years.

Similarly, alternatives to most current oil use such as cycling, public transit, and more efficient vehicles like mopeds and the like present alternatives that are far less costly initially for consumers looking to enter those markets. Not to mention the dreaded "D" word in the US of A. The VMT is down in the states for the first time in three decades. No one knows what will happen, but given how people have behaved in the past I wonder if/when the rate decline in consumption will out pace the rate of decline in production and vice versa.

Maybe it won't, but so far things have been developing faster than many on this forum thought they would. And this is about the doomiest crowd in town.

Compared to some on this forum, people over at TOD are downright realists, and even they come up w/ some pretty big numbers. At least we still have ~5 months to make up for lost pricing eh?

[Dan1195]

When one brings up the decline in VMT, one then has to ask the following question: Does this number ever increase again? If it does, using what form of vehicle? Barring a rapid increase in mpg of vehicles available on dealership lots, more fuel efficient vehicles will not do it (i.e 30 vs 20 mpg is obviously not enough, just do that math. Assume both vehicles allow 300 miles driving distance. If I am replacing a 3 yr-old vehicle, it is still costing me 50% more to fuel my vehicle on $4 vs $2 gas. This fact combined with the amount of time it takes to turnover the automotive fleet, says that VMT wil continue to decline.

PHEV tech is clearly still not progressed to the point where a vehicle with a high enough driving range, capacity, and low enough cost has any plans to make it to the average showroom. Many will be unwilling to buy a vehicle that cannot make the 2 hour highway trip to the relatives OR costs >$50,000 dollars.

[VMarcHart]

So what I want to know is HOW FAST is this projected to happen? Faster than we can drill new wells on the west and east coasts? Faster than we can put windmills and solar panels everywhere?

Yes, way faster. It takes 3 years to install a wind turbine generator. I do that for a living.

Do you mean construct/fabricate/transport/install, or just install like you said?

Yes, the entire cycle, from the day you "think" you found the site to Commercial Operation Date. Even if you doubled the tax incentive, eliminated interconnection hurdles, eliminated permits, mandated sharing of wind data, etc, it would still take 2 years. But that's so far fetched.

The average house uses around 800 gallons around here. That would be over $8000 just to heat the house. Fuggedaboudit!

People will heat their houses to 60F, bundle up, insulate more/better, do the snow-bird, give up their 300-channel TV, soda, cup cakes, etc. Life is a bitch, isn't it?

[threadbear]

So what I want to know is HOW FAST is this projected to happen? Faster than we can drill new wells on the west and east coasts? Faster than we can put windmills and solar panels everywhere?

Yes, way faster. It takes 3 years to install a wind turbine generator. I do that for a living.

Do you mean construct/fabricate/transport/install, or just install like you said?

Yes, the entire cycle, from the day you "think" you found the site to Commercial Operation Date. Even if you doubled the tax incentive, eliminated interconnection hurdles, eliminated permits, mandated sharing of wind data, etc, it would still take 2 years. But that's so far fetched.

The average house uses around 800 gallons around here. That would be over $8000 just to heat the house. Fuggedaboudit!

People will heat their houses to 60F, bundle up, insulate more/better, do the snow-bird, give up their 300-channel TV, soda, cup cakes, etc. Life is a bitch, isn't it?

Agreed. But think of the job losses that will ensue when a culture that is dependent on cheap energy, has to limp along on much less. That seems like the biggest part of the immediate problem to me.

[VMarcHart]

Agreed. But think of the job losses that will ensue when a culture dependent on cheap energy, has to limp along on much less. That seems like the biggest part of the immediate problem to me.

Agreed as well. But I don't think it we'll see an economy in smoldering ruins, especially if this increase comes over 2-4 years.

[VMarcHart]

Funny you should mention those. My wife and I gave up those some two years ago. No more soda, just water with a lemon thanks. 300 channels? Phoooeeeyyy, who needs em, we just have the most basic rudimntary cable service now. So long as I can get my FOX News fix, I am happy. Cup cakes make you fat, something I definitely am not.

That's a sensate approach to peak oil; start trimming the fat, have less or no kids, etc. We too live under our means; one car, walk everywhere, no kids, 2 jobs, no debt, 1 TV, lots of good books, etc.

[Revi]

We won't see an economy in smoldering ruins, because there won't be enough gasoline left to burn anything.

If what Deffeyes says is true and oil goes over $300 in a year or two, car culture is dead.

We'll all be riding the bus instead.

If there is a bus to ride...

[bratticus]

[flash width=425 height=344]http://www.youtube.com/watch/v/4es7u93zRlY[/flash]

[peripato]

[flash width=425 height=344]http://www.youtube.com/watch/v/4es7u93zRlY[/flash]

Pretty good. How do current figures wash against Deffeyes' prediction? Seems spot on, except unemployment numbers. Maybe that's something to "look forward to" next year?

[Tanada]

Ken Deffeyes, using Hubbert knowledge he learned from him personally, wrote his book Beyond Oil: The View From Hubbert's Peak in 2005 where he said the peak is:

postulated as 24 November 2005 (`Thanksgiving' Day), after this date world oil will go into decline, slowly at first then more rapidly

This was for world conventional oil. Considering that the two players left out of the graph above are climbing almost entirely with shale (US) and bypassed oil (Russia) what you have shown is the world's conventional oil production. Deffeyes missed the peak by maybe a few days.

[rockdoc123]

Even when crude rises to $500 or $1,000 unconventionals will remain a blip, a meaningless luxary reserved for generals or billionaires perhaps."

But a much lower price resulted in unconventionals returning US to one of the largest producers in the world. And the vast majority of that oil from unconventional resources in the US is economic at less than $40/bbl.

[rockdoc123]

Not tight shale. It needs $70/barrel.

Anything less and companies go into debt, screw their investors and wait for Pappa Gov to bail them out. The bailout will be promoted to patriotic Americans as necessary for the sake of National Security.

Either you are a complete idiot or you haven't bothered to read a score of posts on this site.

The breakeven price for much of the Permian basin and other unconventional plays is below $40/bbl. What that means is all of the costs involved with finding, drilling, completing, producing and transporting come to less than $40. Anything above that means the company is making a profit. Which is exactly why they are actively drilling now at prices above $50/bbl

[/url]wellhead breakeven by spud year

[rockdoc123]

breakeven? what does that even mean, when the companies are in debt and technically and theoretically broke. breakeven your investments perhaps?

Rockdoc you do your math the way you want it. It's not professional. How many time must we drop the debt on your head for you to comprehend? This is tiring.

Breakeven is exactly what I said it is idiot. All costs associated with finding, developing and producing hydrocarbon with a given well. Debt has absolutely nothing to do with this calculation. It is very simple...if the breakeven cost for a well is $35/bbl and oil is selling at $55/bbl then the producer would net $20/bbl. What does debt have to do with that besides absolutely nothing? This isn't my math...it is the common math used by everyone in the industry including all the financial analysts.

The vast majority of companies are not in trouble because of their debt at current prices, I pointed this out on another thread with the likes of EOG, Chevron, Marathon, CHK all having a plan in place to continually reduce debt based on $50/bbl oil prices. Their carrying costs are easily handled from current EBITDA. The companies that do go under will be bought up by better companies, it has happened continually in the past and it will happen now and in the future, it is the way the business works. You need to read Rockmans thread on chapter 11 filings to understand this. Debt is continually renegotiated, changes hands during sales and is often reconstituted or exchanged in part for shares etc etc.

But once again it has absolutely nothing to do with breakeven costs.

[onlooker]

Sorry to but in to your erudite conversation but ---And the vast majority of that oil from unconventional resources in the US is economic at less than $40/bbl.---
As Pstarr said how can you say that when Debt taken on has and is funding mostly all the activity!

[rockdoc123]

I could do this all day. But I won't bother, as it seems you will never ever believe what is under your nose.

You didn't read my post did you? Bankruptcy neither makes the oil go away nor does the debt disappear. Those companies are bought by other companies and that debt is assumed or exchanged for shares and sometimes terms are renegotiated but the banks always do well and the new owners also do quite well. Again read Rockmans thread.

$110 billion debt wall hey? Well a couple of years ago it was $230 billion. Of that $110 billion almost half is held by Chevron and EOM. Do you really think that those two can't deal with their debt or that banks will not work with them if there are problems? EOM debt to EBITDA is one of the lowest in the industry so they certainly have no problems.

Yes I'm sure you could go on all day posting articles about subject matter you just don't understand.

[Yoshua]

According to BP world conventional oil peak took place in 2005 and then started a slow decline.