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"Tremendous Oil shortage is looming"

General discussions of the systemic, societal and civilisational effects of depletion.

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Re: "Tremendous Oil shortage is looming"

Unread postby AdamB » Thu 18 May 2017, 17:37:42

asg70 wrote:
pstarr wrote:These cornies don't believe the liberal press (as per Trump and GW) but they think oil will last forever. :o Or at least until they manage to graduate their kids out of trade school. With a 'communications' degree lol
communicate BS like Daddy


And how will you feel about this arrogant statement if oil DOES last until after the kids graduate college?


it already has. There were folks who changed their lives back when peak oil happened, gave up school, sold property, got themselves some backyard chickens...and then waited. Weren't they surprised! There were others who sunk time and effort into training, college educations, experience, advanced degrees. Those folks became part of the 1%.

The real tragedy is those who bought into this and killed themselves along the way (rest in peace, tracker of nonsense), at least in part because either their egos couldn't take what was happening (shale revolution hoo rah! glut and abundance!) or they were true believers. Pstarr is more like a shadow of what once was, saying the words, contradicted with ease by reality and 2nd graders who know how to google, I'm not sure there are any honest peakers left? Heinberg maybe? Although he has morphed into an eco-warrior of some sort, and begun back pedaling in some of his more recent writings.
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Re: "Tremendous Oil shortage is looming"

Unread postby kublikhan » Thu 18 May 2017, 17:40:21

pstarr wrote:Nope, this is from your link: "Among the varieties already affected in South America are Venezuela's Diluted Crude Oil (DCO), which is now selling around $15 a barrel "
Yes. Now look at the date in the article: Jan 2016.

pstarr wrote:But anyway I don't keep up with the daily tribulations of the Ven oil industry. But I know this: the production cost still exceeds the sale price of most orinoco super heavy. Sorry
Pstarr, what you "know" and what is the truth are often two different things. Case in point:

Jan 21, 2016 - A barrel of a Venezuelan DCO made with naphtha is usually sold 15 percent cheaper than a crude blend, a government source confirmed. So while Venezuela's price for Merey blend, an extra heavy crude from the Orinoco belt produced by PDVSA and its joint ventures, is currently around $17.25 a barrel, DCO cannot be sold over $15 per barrel. "We have a crude price that is not even covering production costs, which are $24 per barrel"
Price crash puts Colombian, Venezuelan crude blends underwater

So DCO sells at about a 15% discount to Merey. And Merey's price is now closer to $46. DCO with a 15% discount to Merey is $39. If the oil production cost is $24, simple arithmetic tells us $46 sales price minus $24 oil production cost gives us $22 of profit for Merey(extra heavy crude from the Orinoco belt) and $15 profit for DCO.
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Re: "Tremendous Oil shortage is looming"

Unread postby shortonoil » Thu 18 May 2017, 19:07:11

"simple arithmetic tells us $46 sales price minus $24 oil production cost gives us $22 of profit for Merey(extra heavy crude from the Orinoco belt) and $15 profit for DCO."


Does that include replacing the reserves that they are extracting. If it does why is not a single producer on the planet doing it. For an extractive resource industry that means they are going out of business; by definition. You are backing a head horse in the last race. What an idiot.
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Re: "Tremendous Oil shortage is looming"

Unread postby asg70 » Thu 18 May 2017, 19:38:24

shortonoil wrote:
"simple arithmetic tells us $46 sales price minus $24 oil production cost gives us $22 of profit for Merey(extra heavy crude from the Orinoco belt) and $15 profit for DCO."


Does that include replacing the reserves that they are extracting. If it does why is not a single producer on the planet doing it. For an extractive resource industry that means they are going out of business; by definition. You are backing a head horse in the last race. What an idiot.


If they don't replace, supplies go down, prices go UP, and ETP is disproven. So I don't know why you want to project a supply shortfall as if it's a component of ETP.
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Re: "Tremendous Oil shortage is looming"

Unread postby onlooker » Thu 18 May 2017, 19:48:52

supplies go down, prices go UP---And here you reveal your ignorance of a logical conclusion of Etp. Supplies of other resources would work that way but not Oil. It is the key indispensable resource. As such a shortfall of it will hamper economic activity and decrease effective demand, which in turn will prohibit a price rise
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Re: "Tremendous Oil shortage is looming"

Unread postby donstewart » Thu 18 May 2017, 20:59:21

supply and demand curves for oil
The ETP model assumes that economic activity will grind to a halt if oil supplies fail. There are other assumptions, such as those discussed currently by Chris Nelder that electricity can be generated by wind and solar and transportation can be electrified. But if you subscribe to the notion that the 99 percent of weight which is transported or moved (e.g., bulldozers) is by way of trucks and trains and ships and planes, then failure of the oil industry implies a crash in the economy. And THAT is the important point. Whether the price goes up (as desperate rich people bid for it) or governments run the printing presses overtime and generate a Venezueland type inflation is beside the point. The conventional wisdom is that money becomes scarce, so a price decline would not be out of the question. But we now also have payment options like bit coin and even gold and silver.

I don't think there is very good evidence as to exactly what would happen to the street price in a collapse. The main point, however, is very clear: the economy today cannot stand a collapse of the oil business.

If you accept the ETP model evidence that:
*The thermodynamics have turned negative
*The negative thermodynamics restrict economic activity
then the collapse scenario follows.

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Re: "Tremendous Oil shortage is looming"

Unread postby kublikhan » Thu 18 May 2017, 21:24:47

shortonoil wrote:Does that include replacing the reserves that they are extracting. If it does why is not a single producer on the planet doing it. For an extractive resource industry that means they are going out of business; by definition. You are backing a head horse in the last race. What an idiot.
So you decide to ignore the original topic, change the question to something else, and then attack me for not answering your new question?

asg70 wrote:If they don't replace, supplies go down, prices go UP, and ETP is disproven. So I don't know why you want to project a supply shortfall as if it's a component of ETP.
Exactly. If oil production volumes fall, that will drive up the price level as the price point in the market moves to match supply & demand.

onlooker wrote:supplies go down, prices go UP---And here you reveal your ignorance of a logical conclusion of Etp. Supplies of other resources would work that way but not Oil. It is the key indispensable resource. As such a shortfall of it will hamper economic activity and decrease effective demand, which in turn will prohibit a price rise
Oil demand is what we call inelastic. That means it takes a very large price swing to significantly alter demand. You can see this just be looking at history. Between 2010 and 2014 oil prices averaged nearly $90 a barrel. However there was no down swing in global demand. Demand kept growing. Going from 89 million bpd to 94 million bpd.

The demand for oil is relatively inelastic with respect to price, given that oil has few direct substitutes.
The oil market
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Re: "Tremendous Oil shortage is looming"

Unread postby creedoninmo » Thu 18 May 2017, 21:53:19

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Re: "Tremendous Oil shortage is looming"

Unread postby kublikhan » Thu 18 May 2017, 22:06:21

Your link is missing gasoline finished at blenders creedoninmo, which is the majority of US gasoline. Try this link:

U.S. Product Supplied of Finished Motor Gasoline
The oil barrel is half-full.
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Re: "Tremendous Oil shortage is looming"

Unread postby AdamB » Thu 18 May 2017, 23:14:26

shortonoil wrote:
"simple arithmetic tells us $46 sales price minus $24 oil production cost gives us $22 of profit for Merey(extra heavy crude from the Orinoco belt) and $15 profit for DCO."


Does that include replacing the reserves that they are extracting.


You've got to be kidding? You really don't know squat about the oil industry, and here I thought you were just pretending to know nothing about upstream.

A commodity price, minus the cost for producing, is what is generally called "profit". How those proceeds get spent isn't even on the same topic.

Quick question, can you even balance a checkbook, or are random equations having not much to do with the oil field the best you can do?

shortonoil wrote:If it does why is not a single producer on the planet doing it. For an extractive resource industry that means they are going out of business; by definition. You are backing a head horse in the last race. What an idiot.


Let me guess...you think they are...short on oil? BBWWAAHHAAHAAA!!

I recommend checking out those USGS resource estimates that you excluded from your spurious relationship generator because..you know...if you did it right, you wouldn't be able to develop the spurious relationship.
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Re: "Tremendous Oil shortage is looming"

Unread postby AdamB » Thu 18 May 2017, 23:17:39

onlooker wrote:supplies go down, prices go UP---And here you reveal your ignorance of a logical conclusion of Etp. Supplies of other resources would work that way but not Oil.


It always has before. Perhaps you don't remember the Saudi's manipulating prices in exactly this way..or wait...reality....it not being the strong suit of zealotry, maybe you just don't want to remember? Or...can't?

onlooker wrote:It is the key indispensable resource.


No it isn't. This is.

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Re: "Tremendous Oil shortage is looming"

Unread postby AdamB » Thu 18 May 2017, 23:19:50

kublikhan wrote:
shortonoil wrote:Does that include replacing the reserves that they are extracting. If it does why is not a single producer on the planet doing it. For an extractive resource industry that means they are going out of business; by definition. You are backing a head horse in the last race. What an idiot.
So you decide to ignore the original topic, change the question to something else, and then attack me for not answering your new question?


What do you expect him to do, when you lift the rock and let the light see what he hides underneath?
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Re: "Tremendous Oil shortage is looming"

Unread postby AdamB » Thu 18 May 2017, 23:34:17

donstewart wrote:supply and demand curves for oil
The ETP model assumes that economic activity will grind to a halt if oil supplies fail.


No it doesn't. It assumes the world ends because oil gets CHEAP. It has nothing to do with supply and demand curves because those tend to work, and whatever the ETP is, it isn't designed to do that.

Don Stewart wrote:I don't think there is very good evidence as to exactly what would happen to the street price in a collapse.


There is history. Go look back at the collapse of 1930 when East Texas came online, and what happened in 1986 when the Saudi's flooded the market. Oil got cheap, the world didn't end, and in both case economic activity afterwards increased and got better.

Don Stewart wrote:The main point, however, is very clear: the economy today cannot stand a collapse of the oil business.


That isn't the point of the ETP. It is to pretend the economy will collapse because of cheap oil. The ETP doesn't know anything about the oil and gas business, let alone supply or demand curves, and the sock puppet salesmen have amply demonstrated they don't understand economics either, let alone how oil functions within the economy.

Don Stewart wrote:If you accept the ETP model evidence that:
*The thermodynamics have turned negative
*The negative thermodynamics restrict economic activity
then the collapse scenario follows.


If you accept that the ETP calculates that 2+2=5, or that the sun will rise in the west tomorrow, then obviously, anything that follows must be true.

Here is the short version of the ETP, for those who haven't figured out after 2 minutes and 2 questions that it generates a wonderful spurious relationship. Pictures being worth 1000 words.
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Re: "Tremendous Oil shortage is looming"

Unread postby pessimisticoptimist » Fri 19 May 2017, 01:30:16

Adam B
"There is history. Go look back at the collapse of 1930 when East Texas came online, and what happened in 1986 when the Saudi's flooded the market. Oil got cheap, the world didn't end, and in both case economic activity afterwards increased and got better."

Why is it then, now that oil is cheap (at least relative to $147 or $110 per barrel) that the economy isn't growing again rapidly? Something seems very amiss. Surely GDP per capita should be increasing world wide yet it isn't. Why are the balance sheets of the oil majors looking so terrible?
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Re: "Tremendous Oil shortage is looming"

Unread postby donstewart » Fri 19 May 2017, 01:50:07

@AdamB
First, you have an obsolete map of the brain. Suggest you read the just published book How Emotions Are Made: The Secret Life of the Brain by Lisa Feldman Barrett. You will discover that the brain is not carved up into different functional pieces. It is, instead, a complex system.

Second, the ETP model, as I understand it, is also a complex system. There are not completely separate production and consumption pieces, nor is there a separate piece called 'price'. Everything is related to everything else...as many wise and famous people have said about the world. The ETP model is built on the basis that production and consumption and prices are all simultaneously determined. The total economy can only operate if it is thermodynamically stable. If the thermodynamics become unfavorable, then something has to change. If the thermodynamics became unfavorable because of waste in the non-petroleum economy, then reforming that sector may suffice to fix the problem. However, if the thermodynamics of the petroleum sector have become unfavorable due to the effects of depletion, then nothing the non-petroleum sector can do will have any effect, including printing more money and giving it to the petroleum sector. (Over the long term...printing money can sort of work in the short term, I think.)

The ETP model also, as I have mentioned many times, is also a 'biological model', in that the system has to reproduce itself. This biological concept is different than a conventional profit and loss statement, which can be positive as a business goes out of business.

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Re: "Tremendous Oil shortage is looming"

Unread postby onlooker » Fri 19 May 2017, 02:27:59

@Don Correct. The thermodynamics to me is the key to understanding Etp. From attaining an in depth analysis of the thermodynamics of the Oil Industry, it can then deduce an oil price regime or affordability curve. Then from a kind of regression analysis of production, project the ability of the Oil Industry to function or not. That is to sort of reach a dead state. According to Observer and Bahama , the Etp has been quite accurate in predicting future price maximums. Adam points to past circumstances of price increase in response to lower supply. The difference is the thermodynamics were more favorable back then, then now. Given that, the Economy as a whole is and will be even further starved of Energy to function. And together with the Oil Industry drag each other down to the nadir in a reciprocal downward spiral
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Re: "Tremendous Oil shortage is looming"

Unread postby Cog » Fri 19 May 2017, 05:43:33

Recessions have occurred repeatedly in the past wholly independent of what the price of oil was. They will continue to do so.
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Re: "Tremendous Oil shortage is looming"

Unread postby donstewart » Fri 19 May 2017, 06:09:02

@Cog
The issue here is not the price of oil. The issue is the availability of useful energy to do work. Price is one factor among many.
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Re: "Tremendous Oil shortage is looming"

Unread postby vtsnowedin » Fri 19 May 2017, 06:20:18

donstewart wrote:@Cog
The issue here is not the price of oil. The issue is the availability of useful energy to do work. Price is one factor among many.
Don Stewart

A barrel of oil delivered to the refinery has the same number of BTUs in it as it always has. And a gallon of oil products: gas , diesel or whatever else you want, coming out the other end of the refinery has the same number of BTUs in it as well, and the number of gallons coming out of the refinery per barrel of oil going in has not changed either.
The only thing that is changing is the amount of energy and money spent on finding, drilling for and delivering that oil to the refinery and that has to be calculated over all the different oil fields in the world from KSA to Alberta tar sands times each ones percentage of the market.
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Re: "Tremendous Oil shortage is looming"

Unread postby donstewart » Fri 19 May 2017, 07:10:17

@vtsnowedin
'that has to be calculated over all the different oil fields in the world'

Mr. Hill explains in his document why he chose not to try to do that impossible task. He also explains how he gets his estimates for the global oil business.

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