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When do we fall off the undulating plateau? Pt 2

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

Re: When do we fall off the undulating plateau? Pt 2

Unread postby KaiserJeep » Tue 07 Nov 2017, 10:16:24

Revi wrote:I keep hearing that 2020 is when the wheels really fall off. The US surplus is about gone, and we are going into 2018 with an oil price almost at $60. (Hard to tell if that's just due to Saudi instability or caused by scarcity) When will be world economy crack and oil prices fall again? Hard to tell. It's like we are falling down a set of steps. So far the steps have been small, but soon they get steeper and steeper...


What, pray tell, will cause "the wheels really fall off"? We suffered through $130 oil during the oil embargo, and the wheels didn't fall off. We still have an oil glut as of today, the US is currently the largest oil producer in the world, and the US will be able to pay higher prices than anyone else if we have to again increase oil imports. There are at least 50-60 years of declining production left in existing oil fields, there are tar sands and oil shales in production. Our refineries will have oil from all these sources, via pipelines and tanker ships. We are fracking oil and gas out of the ground and mining coal. The average cost of a kWh of grid electricity has rizen from $0.117 in 2013 to $0.129 in 2016, and who knows, might break through the $0.130 barrier in 2017.

The steadily increasing cost of energy is hurting the world, and the hurt will grow from year to year until countries with marginal economies begin to break. But for the life of me, I can't see any reason why the USA should not be the last to suffer, and suffer the least. We also have more resources to devote to renewable energy production, why should that not continue to increase?

I personally will not buy another ICE vehicle, although I did promise one to the wife, I'll only insist that she get the flex fuel option, as I believe that even with more and more expensive oil, there will still be corn grown and ethanol including E85 fuels in the MidWest. We just busted through the $4./g mark in the SF Bay area - again. This year I expect the same will be true on Nantucket, but we don't buy much there, either. Like I said, I'm well under 100 gallons for this year. I will keep the Jeep Wrangler in Wisconsin, and drive it in the Winter. I hope to add at least one EV and will charge it with renewable energy generated on my property. We will keep the former MIL's 20+ year old downsized Chevy Blazer on Nantucket, and probably put less than 500 miles on that annually.

I actually do believe in the end of oil, and that it will constitute a disaster. I expect this will cause political unrest in the USA, and has already produced starvation, refugees, and general disarray in some parts of the world. But we seem better positioned in the USA than anywhere else, and will probably suffer less, not more. But Kunstler's "Long Emergency" scenario has been in place for decades.

I guess I am not feeling especially Doomish today. The undulating plateau stretches to the horizon in all directions.
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Re: When do we fall off the undulating plateau? Pt 2

Unread postby GHung » Tue 07 Nov 2017, 10:40:44

" But we seem better positioned in the USA than anywhere else, and will probably suffer less, not more."

I'm not so confident. Our economy is built around current levels of consumption and our population is largely deluded, has a strong sense of entitlement, isn't getting along so well, politically, and is prone to blaming their own. Externally, other countries own a huge amount of our debt and generally don't like us much as of late. The US is utterly reliant upon our current position in an interconnected global economy. We have squandered our ability to adapt for short-term faux growth, while most of the world I've seen first hand is more used to change and adaptation.

In short, the US population is spoiled rotten and it will take a couple of generations to purge ourselves of our deluded exceptionalism.
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Re: When do we fall off the undulating plateau? Pt 2

Unread postby vtsnowedin » Tue 07 Nov 2017, 12:00:37

GHung wrote:" But we seem better positioned in the USA than anywhere else, and will probably suffer less, not more."

I'm not so confident. Our economy is built around current levels of consumption and our population is largely deluded, has a strong sense of entitlement, isn't getting along so well, politically, and is prone to blaming their own. Externally, other countries own a huge amount of our debt and generally don't like us much as of late. The US is utterly reliant upon our current position in an interconnected global economy. We have squandered our ability to adapt for short-term faux growth, while most of the world I've seen first hand is more used to change and adaptation.

In short, the US population is spoiled rotten and it will take a couple of generations to purge ourselves of our deluded exceptionalism.

Don't sell the millennials so short. They are the same genetic stock as their grandparents that lived through the great depression just have been raised without any adversity in their lives as of yet. Let hard times befall them and they will rise to the occasion in a time span measured in months or a few years not in whole generations.
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Re: When do we fall off the undulating plateau? Pt 2

Unread postby pstarr » Tue 07 Nov 2017, 15:30:42

It was not the grandparents of the millennials that ended the Great Depression. Temporary climate disruption and bad agriculture practices were corrected. 1st Gen Industrial economy was replaced by 2nd Gen global consumer/industrial economy and WWII put folks to work.

Now there are 80 million U.S. Millennials. Millennials live in cities and suburbs with no access to property or tools. Home ownership is barely more than half the national number, at just 34.1 percent. This is a record low and about a fifth below its peak from the go-go years of the mid-2000s.

Those millennials that do own homes, most likely have little no land. The average property for most Americans is 1/8 acre including home and drive, not nearly enough to raise food for one person, much less an extended family of parents and millennial children. Nothing will end the End of Oil. Unless you believe in the ITER lol
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Re: When do we fall off the undulating plateau? Pt 2

Unread postby vtsnowedin » Tue 07 Nov 2017, 15:45:08

pstarr wrote:It was not the grandparents of the millennials that ended the Great Depression. Temporary climate disruption and bad agriculture practices were corrected. 1st Gen Industrial economy was replaced by 2nd Gen global consumer/industrial economy and WWII put folks to work.

Now there are 80 million U.S. Millennials. Millennials live in cities and suburbs with no access to property or tools. Home ownership is barely more than half the national number, at just 34.1 percent. This is a record low and about a fifth below its peak from the go-go years of the mid-2000s.

Those millennials that do own homes, most likely have little no land. The average property for most Americans is 1/8 acre including home and drive, not nearly enough to raise food for one person, much less an extended family of parents and millennial children. Nothing will end the End of Oil. Unless you believe in the ITER lol

I did not say the Grandparents ended the great depression. I said they lived through it and adapted to the conditions. I don't know what the home ownership rate for that age group was back in the thirties but a lot of foreclosures happened. Understand you could buy a pretty good house then for $1800.
Of course the next crisis will not resemble anything that has gone before. I am suggesting that the millenials will prove to have the strength to muddle through whatever happens and will adapt to the actual conditions and overcome all obstacles. That does not mean there will not be a lot of whining and pouting before they get over their reality check.
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Re: When do we fall off the undulating plateau? Pt 2

Unread postby vtsnowedin » Tue 07 Nov 2017, 15:57:25

A note about home "ownership" To my parents generation owning a home meant you owned it free and clear with all mortgages paid in full. If the bank held the mortgage the bank was the owner and you were one misfortune from being out on the street. Owning something free and clear, even a shack on a couple of acres suitable for a garden was to be much preferred to a much larger house that you had little or no equity in. My fathers statement on it went something like this. If you own a place free and clear you always have a place to come home to. Add up all the homes "owned in America" and then deduct the value of the mortgages presently on them and get the percentage that the occupant actually own. I'm betting the percentage was a lot higher in 1929 and higher still in 1940.
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Re: When do we fall off the undulating plateau? Pt 2

Unread postby AdamB » Tue 07 Nov 2017, 15:57:41

Revi wrote:I keep hearing that 2020 is when the wheels really fall off.


Tony says that is when the next peak oil happens, absolutely. But "wheels falling off" isn't quite what happens next....more like...the beginning of just fewer wheels being necessary.

Revi wrote:The US surplus is about gone, and we are going into 2018 with an oil price almost at $60.


The US never had a surplus in oil, so I'm not quite sure what you mean by that. As far as $60/bbl, that is but a small fraction of what the nominal price was during the last peak oil, and why do you care Revi? Didn't you say you had a nice NEV to run around in, let your neighbors who can't be bothered to join us in the EV ranks continue to pay the price for their inability to get with the program. EV on!

Revi wrote: (Hard to tell if that's just due to Saudi instability or caused by scarcity)


Easy to tell. I'll give you a clue...you are confusing scarcity with the expected price response to changes in supply. Not scarcity. No one gets to say that about the Permian any time soon, based on what the USGS is saying, and producers in the basin are doing.

Revi wrote: When will be world economy crack and oil prices fall again?


The world economy didn't crack last time...the US turned on oil production the size of Ghawar and drowned it in oil. Prices crashed. You were there. The economy loved it. It was called a glut. Did you miss it?

Revi wrote: Hard to tell. It's like we are falling down a set of steps. So far the steps have been small, but soon they get steeper and steeper...


What steps? Your pension account hasn't taken a hit did it, what with the market behaving the way it has been, the price of oil is way down in the midterm, collapse is such a non issue that the utilities had all the fuel and supplies they needed to repair your states electric after it was wiped out across half the state, are you watching shows like the Walking Dead and confusing that with reality around you, or are you just hypothesizing, ever hopeful in the next round of oilpoclypse that always seems so close, but you just can't ever touch?
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Re: When do we fall off the undulating plateau? Pt 2

Unread postby GHung » Tue 07 Nov 2017, 16:12:42

AdamB wrote:
Revi wrote:I keep hearing that 2020 is when the wheels really fall off.


Tony says that is when the next peak oil happens, absolutely. But "wheels falling off" isn't quite what happens next....more like...the beginning of just fewer wheels being necessary.

Revi wrote:The US surplus is about gone, and we are going into 2018 with an oil price almost at $60.


The US never had a surplus in oil, so I'm not quite sure what you mean by that. As far as $60/bbl, that is but a small fraction of what the nominal price was during the last peak oil, and why do you care Revi? Didn't you say you had a nice NEV to run around in, let your neighbors who can't be bothered to join us in the EV ranks continue to pay the price for their inability to get with the program. EV on!

Revi wrote: (Hard to tell if that's just due to Saudi instability or caused by scarcity)


Easy to tell. I'll give you a clue...you are confusing scarcity with the expected price response to changes in supply. Not scarcity. No one gets to say that about the Permian any time soon, based on what the USGS is saying, and producers in the basin are doing.

Revi wrote: When will be world economy crack and oil prices fall again?


The world economy didn't crack last time...the US turned on oil production the size of Ghawar and drowned it in oil. Prices crashed. You were there. The economy loved it. It was called a glut. Did you miss it?

Revi wrote: Hard to tell. It's like we are falling down a set of steps. So far the steps have been small, but soon they get steeper and steeper...


What steps? Your pension account hasn't taken a hit did it, what with the market behaving the way it has been, the price of oil is way down in the midterm, collapse is such a non issue that the utilities had all the fuel and supplies they needed to repair your states electric after it was wiped out across half the state, are you watching shows like the Walking Dead and confusing that with reality around you, or are you just hypothesizing, ever hopeful in the next round of oilpoclypse that always seems so close, but you just can't ever touch?


"The US never had a surplus in oil, so I'm not quite sure what you mean by that."

"The economy loved it. It was called a glut."


Synonyms for "glut":

saturation
oversupply
SURPLUS

Maybe you should get someone to check your posts for you Adam, lest you look even more confused.
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Re: When do we fall off the undulating plateau? Pt 2

Unread postby vtsnowedin » Tue 07 Nov 2017, 16:23:49

You guys are talking around each other.Yes the storage in the USA was full to capacity so there was a "surplus" but while that was true we were as usual importing seven million barrels of oil each day so the domestic supply was never sufficient or anywhere near surplus. If there was a true surplus it was only when you look at the total world supply.
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Re: When do we fall off the undulating plateau? Pt 2

Unread postby GHung » Tue 07 Nov 2017, 16:29:56

vtsnowedin wrote:You guys are talking around each other.Yes the storage in the USA was full to capacity so there was a "surplus" but while that was true we were as usual importing seven million barrels of oil each day so the domestic supply was never sufficient or anywhere near surplus. If there was a true surplus it was only when you look at the total world supply.



Gosh, VT, if I have more oranges in my kitchen than I can eat, it doesn't matter where they came from, does it? I have a "surplus", which is the same as a "glut" according to the Thesaurus.

Or maybe I don't like people who constantly talk out of both sides of their mouth while contradicting themselves.
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Re: When do we fall off the undulating plateau? Pt 2

Unread postby AdamB » Tue 07 Nov 2017, 22:23:48

GHung wrote:"The US never had a surplus in oil, so I'm not quite sure what you mean by that."

"The economy loved it. It was called a glut."


Synonyms for "glut":

saturation
oversupply
SURPLUS

Maybe you should get someone to check your posts for you Adam, lest you look even more confused.


For the US to have an oil surplus, it would need to make more than it consumed. A completely legitimate reading of your initial statement. And inaccurate. Hence my confusion as to what you meant by "surplus". If you wish to be properly understood, may I recommend having your uncle do your proof reading?
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Re: When do we fall off the undulating plateau? Pt 2

Unread postby Tanada » Tue 07 Nov 2017, 23:24:11

AdamB wrote:
GHung wrote:"The US never had a surplus in oil, so I'm not quite sure what you mean by that."

"The economy loved it. It was called a glut."


Synonyms for "glut":

saturation
oversupply
SURPLUS

Maybe you should get someone to check your posts for you Adam, lest you look even more confused.


For the US to have an oil surplus, it would need to make more than it consumed. A completely legitimate reading of your initial statement. And inaccurate. Hence my confusion as to what you meant by "surplus". If you wish to be properly understood, may I recommend having your uncle do your proof reading?


That's not correct IMO. Back in 2008 the Toledo Jeep plant had a massive surplus of unsold vehicles, so many they rented the parking lot at the defunct local mall and filled nearly the whole thing with parked factory fresh vehicles under guard to prevent theft and vandalism. Just because the local jeep plant had this stockpile/surplus in storage doesn't mean the folks in China who wanted a new vehicle also had a surplus, and just because they were not building enough jeeps for everyone in the USA or world to have one does not mean there was a shortage either.

For the USA consumer the number of barrels of oil imported to the USA from overseas plummeted from about 12 MM/bbl/d in 2005 to about 5 MM/bbl/d in 2015. While this did not erase the imports to the USA of foreign produced oil and petroleum refinery products it most certainly freed up at least 5 MM/bbl/d of world consumption formerly taken by the USA and provided that same oil to China, India and anyone else willing and able to pay for it during that same period of time. As of the latest EIA weekly status report we took in 7.6 MM/bbl/d but we in turn exported both crude oil and refinery products which lowered our net import consumption to roughly 5 MM/bbl/d.

You can claim any semantic variation you want to but that fact is the fracking boom in the USA exceeded the world demand for additional oil on the world market starting about June of 2014. Because of the way drilling cycles work the USA continued to produce even more oil for a full year after June 2014 to almost break the 1970-71 peak in June 2015 and most definitely set a new post peak high. That additional oil on the world market was generated by two things, the economic slowdown in the EU and North America freed up some of the consumption that had been taking place before 2005, and the USA fracking boom added about 7 MM/bbl/d of brand new supply to the world market by June 2015. In spite of both the lower demand in the post industrial areas of the world and the massive increase in supply from North America the economy of China, India and other rapidly developing areas were able to absorb almost all of that increase in available oil at a market price ranging from $80/bbl to $110/bbl over the period from late 2009 through mid 2014. from November 2014 through June 2015 prices remained above $60/bbl WTI despite the increasing world supply as OPEC moved to produce as much as they could to "defend market share". With all the massive hype about Iran doubling its oil output with the lifting of sanctions from June 2015-January 2016 when sanctions were actually lifted WTI prices were crushed to levels not seen since the very brief 2008-09 crash. Even so prices did not take very long to bounce back up to $40/bbl with only about 3 months averaging below that price. Back in 2005 most of the old timers who have been here since the beginning thought prices passing $40/bbl was a very ominous event, yet in 2016 it was seen as a brief respite by many before the price fell again with predictions of $15/bbl, or even $10/bbl or less coming from some long term members here. In stable unadjusted dollar terms oil has been at or above $50/bbl since early 2005 with a brief excursion in 2008-09 and again from 2015-2016. On the other side of the price coin the WTI figure has been at or over $80 for close to a year in 2007-08 and after the brief crash of 08-09 recovered to be over $80/bbl in 2010 and held there or higher until late 2014. USA crude oil imports graph next.
Image

At the following LINK you can see a bar graph of average WTI prices through 2015. The 2016 number is tentative and no 2017 number is yet available but it is easy to see that on an annual basis WTI has been averaging over $50/bbl since 2005 and even in 2015 the average was $48.66/bbl which is pretty darn close. True 2016 with the confluence of all factors averaged about $43/bbl but the average for this year was already close to $50/bbl and unless world tensions suddenly ease and the glut returns we look set to stay above $50/bbl for the rest of the year which will place the yearly average above that number. All things considered I find the prospect of sudden peace in the middle east unlikely, to say the least, certainly for the short term.
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Re: When do we fall off the undulating plateau? Pt 2

Unread postby AdamB » Wed 08 Nov 2017, 00:06:00

Tanada wrote:For the USA consumer the number of barrels of oil imported to the USA from overseas plummeted from about 12 MM/bbl/d in 2005 to about 5 MM/bbl/d in 2015. While this did not erase the imports to the USA of foreign produced oil and petroleum refinery products it most certainly freed up at least 5 MM/bbl/d of world consumption formerly taken by the USA and provided that same oil to China, India and anyone else willing and able to pay for it during that same period of time. As of the latest EIA weekly status report we took in 7.6 MM/bbl/d but we in turn exported both crude oil and refinery products which lowered our net import consumption to roughly 5 MM/bbl/d.

You can claim any semantic variation you want to but that fact is the fracking boom in the USA exceeded the world demand for additional oil on the world market starting about June of 2014.


You are completely correct, and thanks for providing the numbers proving that the US didn't have the ability to meet its own consumption, therefore it didn't have the kind of "surplus" that the original statement seemed to imply.

The light, tight oil production in the US exactly screwed up the world supply/demand balance, and moved the marginal barrel out of the hands of the Saudi's, created the glut that has been going on for a few years now, and dashed the hopes of oil doomers the world over.
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Re: When do we fall off the undulating plateau? Pt 2

Unread postby dcoyne78 » Tue 14 Nov 2017, 11:31:54

Hi Guys,

It was pretty clear that the "surplus" in the US was the excess oil in storage relative to the 5 year average. See

https://www.eia.gov/totalenergy/data/br ... arted=5-12
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Re: When do we fall off the undulating plateau? Pt 2

Unread postby marmico » Tue 14 Nov 2017, 12:18:33

Commentator, Dave Davis, at Art Berman's blog, makes an interesting point* when it comes to the US inventory glut. Inventory rose due to additional barrels in domestic pipelines/storage tanks that substituted for imports offloaded at tidewater ports. The same quantity of barrels of oil are getting to the refinery gate but there is more (less) oil in domestic (import) transit which is included (excluded) in EIA inventory.

http://www.artberman.com/u-s-supply-oil ... mment-3413

*hat tip joshua
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Re: When do we fall off the undulating plateau? Pt 2

Unread postby pstarr » Tue 14 Nov 2017, 12:43:20

marmico wrote:Commentator, Dave Davis, at Art Berman's blog, makes an interesting point* when it comes to the US inventory glut. Inventory rose due to additional barrels in domestic pipelines/storage tanks that substituted for imports offloaded at tidewater ports. The same quantity of barrels of oil are getting to the refinery gate but there is more (less) oil in domestic (import) transit which is included (excluded) in EIA inventory.

http://www.artberman.com/u-s-supply-oil ... mment-3413

*hat tip joshua

Did you even read the article? The difference in storage is a consequence of the difference in measurement between oil in (ship) transit and oil in pipeline. With decrease in imports the counted storage increases. Therefor the so-called glut is a chimera. Imaginary. A measure of hopeless hope.
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Re: When do we fall off the undulating plateau? Pt 2

Unread postby asg70 » Tue 14 Nov 2017, 14:49:07

pstarr wrote:Therefor the so-called glut is a chimera. Imaginary. A measure of hopeless hope.


Seems pretty real when I go to gas up.
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