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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 » Wed 16 May 2018, 04:56:39

One can agree...or not...that we live in the oil age...and that energy is the economy...and that oil is the master resource.

The global oil production growth and the global GDP growth in petrodollar terms have followed each other...until the Etp Model's energy half way point...after that point things became chaotic.

Do you want to claim that global GDP growth in dollar terms is just inflation?

Monetary theory is complex. What is money? Is it possible to measure GDP in money?

The laws of physics can not be corrupted...but money is the mother of corruption. Who would be crazy enough to combine the laws of physics and money in a theory?

Rockman is drilling oil for dollars. Inflation adjusted dollars? No. Just dollars.

If the energy cost to produce petroleum is rising...then the dollar cost to produce petroleum should rise as well...and that rise should then show up as an increase in the price in petrodollars per barrel. The Etp model claimed that the increase in the energy cost to produce a barrel of petroleum started to rise exponentially after 2000 and that this was reflected by the price in dollars per barrel.

Personally I don't believe it is possible to predict the oil price after the energy half point...since after that point business as usual is no longer possible. After that point things become too chaotic.

I believe that we will see more failed economies and failed States as we go forward...as rising oil prices thrash oil importers and falling oil prices trash oil exporters.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Yoshua » Wed 16 May 2018, 05:48:29

Central and South America's oil production and consumption are almost equal.

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

Unread postby KaiserJeep » Wed 16 May 2018, 08:58:57

The classical problem with all economic modelling is that there is no accounting for human psychology and panic effects. Those factors really do depend upon random elements - what a politician like Trump or Putin or even the Little Great Leader of Korea says or does. The actual number of people whose actions affect the world population's psychological outlook is a relatively small one, measured in the hundreds. They in fact act like the Alpha chimps of rival tribes, screaming and gesturing, all trying to get their own way with everything. Random acts of chaos are the result.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby pstarr » Wed 16 May 2018, 09:58:35

Yoshua wrote:Central and South America's oil production and consumption are almost equal.

Image

Equally collapsing, the same as every oil region
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Tanada » Wed 16 May 2018, 10:41:26

Decline does not a collapse make. Stupid decisions are what makes a collapse.
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Outcast_Searcher » Wed 16 May 2018, 10:47:26

Yoshua wrote:Central and South America's oil production and consumption are almost equal.

Image

Global oil production and consumption tend to be almost equal, especially over time. So what is your point?
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 » Wed 16 May 2018, 10:52:35

Yoshua wrote:
If the energy cost to produce petroleum is rising...then the dollar cost to produce petroleum should rise as well...and that rise should then show up as an increase in the price in petrodollars per barrel. The Etp model claimed that the increase in the energy cost to produce a barrel of petroleum started to rise exponentially after 2000 and that this was reflected by the price in dollars per barrel.

And if the mythical troll were real, we'd see them with rocks under bridges. And if apples were crocodiles, they'd be difficult to pick.

The ETP has increasingly been shown to be complete nonsense, hence the subject of this thread. So why do you keep repeating the nonsense about the exponential cost rise to produce oil? If you ignore inflation in your calculations over several decades as shorty did, almost everything would seem to be impacted like that. That's why "real dollars" are used in any credible economic numbers spanning decades.
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 Yoshua » Wed 16 May 2018, 12:15:19

Inflation seems to increase with the rise in oil prices. Inflation is perhaps a function of rising oil prices? As the oil price rises, the cost to produce goods and services increases and the producers then transfer that cost to consumers by raising the price of goods and services.

I believe that shortonoil said that the cost to produce oil has been rising exponentially since 1960?

The oil price is up 75% since last summer. The Fed is talking about inflation expectations, but this time inflation is not coming? Things are different this time?

You may agree with the Etp Model or not...but it allows one to look at the global economy in new way. After the Etp Model's energy half way point things become very weird though...things do not behave as usually after that point.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby vtsnowedin » Wed 16 May 2018, 13:02:20

Yoshua wrote:Inflation seems to increase with the rise in oil prices. Inflation is perhaps a function of rising oil prices? As the oil price rises, the cost to produce goods and services increases and the producers then transfer that cost to consumers by raising the price of goods and services.

I believe that shortonoil said that the cost to produce oil has been rising exponentially since 1960?

The oil price is up 75% since last summer. The Fed is talking about inflation expectations, but this time inflation is not coming? Things are different this time?

You may agree with the Etp Model or not...but it allows one to look at the global economy in new way. After the Etp Model's energy half way point things become very weird though...things do not behave as usually after that point.

Well of course rising oil prices are inflationary especially in the USA where citizens drive cars, eats food grown with diesel and chemical fertilizers, wear clothes either made from fibers grown with oil or synthetics made directly from oil and live in houses produced using oil and almost every object in the house as well.
If the price of producing oil has been rising exponentially sense 1960 then the exponent of the equation must be a very small one just over 1.0 if the time period is year on year. As in 1X^1.010/year.
And again we are nowhere near the energy halfway point.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby pstarr » Wed 16 May 2018, 13:30:33

Tanada wrote:Decline does not a collapse make. Stupid decisions are what makes a collapse.

Not according to IEA. Expended oil fields/oil regions/oil nations/oil planets decline at a 6.7% annual rate.
The IEA’s World Energy Outlook 2008 included, for the first time, a study of the depletion rates of the world’s top 800 oil fields. It found rates of 6.7% for past-peak fields, increasing to 8.6% by 2030 (the end date of the report’s “reference scenario”). Averaged across all fields, the rate is 5.1%. Against such high decline rates-up from a generally accepted 4.5% estimate only a few years ago–the agency calculates that the world would need to add a whopping 64 million barrels per day (mbpd) of new capacitybetween 2007 and 2030 in order to meet an anticipated demand growing at 1.6% per year. That’s like adding six new Saudi Arabias.

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

Unread postby Yoshua » Wed 16 May 2018, 14:11:16

I don't remember what the exponent of the equation is. I believe it was close to 2%...something like 1,87%. At a low energy cost per barrel in 1960 an increase by 2% might not be that much...but when the energy cost is high...then an increase by 2% becomes a large number.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Yoshua » Wed 16 May 2018, 14:38:33

If the energy half way point was reached in 2012 and today in 2018 60% of the energy content in a barrel of crude is consumed to a barrel of crude...then the exponent must be close to 4%.

0.5 * 1.04 = 0.52

I don't know it all...I'm still learning.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Outcast_Searcher » Wed 16 May 2018, 20:56:29

Yoshua wrote:If the energy half way point was reached in 2012 and today in 2018 60% of the energy content in a barrel of crude is consumed to a barrel of crude...then the exponent must be close to 4%.

0.5 * 1.04 = 0.52

I don't know it all...I'm still learning.

Nonsense. Prove it. Remember, ETP is a failure re its predictions, so pointing to that means nothing.
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 Yoshua » Thu 17 May 2018, 03:39:37

The Etp Model was very accurate until the energy half way point. The WTI price followed the Etp Model's rising energy cost curve.

The average inflation rate in the U.S from 1914 to 2017 has been 3.27 percent. The Etp Model starts in 1960 and its exponent is 3-4 percent.

The Etp Model is a beautiful machine...it allows one to discover strange things...but you asking me to prove its correctness. I don't know how to do it.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby vtsnowedin » Thu 17 May 2018, 05:20:07

Yoshua wrote:If the energy half way point was reached in 2012 and today in 2018 60% of the energy content in a barrel of crude is consumed to a barrel of crude...then the exponent must be close to 4%.

0.5 * 1.04 = 0.52

I don't know it all...I'm still learning.

But that is the point. The energy halfway point was not reached in 2012 and has not yet been reached and it will not be for decades.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby asg70 » Thu 17 May 2018, 07:19:15

Yoshua wrote:The Etp Model is a beautiful machine...it allows one to discover strange things...but you asking me to prove its correctness. I don't know how to do it.


I don't know how any rational human being can read this statement without slowly shaking your head.

I get it. You like to clutch at theories that allow you to "discover strange things", and the high from that feeling is more important than whether such theory is well-proven or not, nor do you think you have the intellectual capacity to test it for yourself. It's pretty much the same reason why Ancient Aliens is a thing on the History Channel.
“If and when the oil price skewers for 6 months or more substantially above the MAP, then I will concede the Etp is inherently flawed"
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Outcast_Searcher » Thu 17 May 2018, 10:37:44

Yoshua wrote:The Etp Model is a beautiful machine...it allows one to discover strange things...but you asking me to prove its correctness. I don't know how to do it.

How about just proving the consequences (oil is unaffordable, even at a very low price) is even in the BALLPARK? No knowledge of physics required -- just read an oil price quote.

Just show us that the ETP MAP is in the ballpark after 2020. Show us how WTI is below $2 after 2021, or even the $13ish forecast for 2020 AND that it's so low because people can't generally afford it, and I'll be willing to take another look at the ETP.

As it is, BAU supply and demand factors globally make WTI at $100 or higher, with people generally affording oil just fine (re global GDP continuing to advance) just as occurred in mid 2010 to 2014, a far more likely looking reality. (Fine by me, as it should speed the transition to HEV's, PHEV's, and BEV's).

The ETP a beautiful machine?

Unicorns are a beautiful idea, but not so practical in a world where facts matter.
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 » Thu 17 May 2018, 12:18:38

It is easy to build models that predict the past. They are useless though.
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby Yoshua » Thu 17 May 2018, 13:17:13

We were talking about inflation and the Etp Model's rising energy/price curve. I showed that the average historical inflation rate and the Etp Model's exponent are basically one and the same. That is the best I can do. I don't know how to prove that the Etp Model's exponent is the cause and the inflation rate is the effect. I can give you a logic argument as I did above...but that is all.

To prove it I would have to prove that the laws of physics determines the future of the economy. Even if that idea would seem to be obvious...since everything in the universe is ruled by the laws of physics...I'm still not the one to actually prove it.

After the energy half way point the WTI price starts to behave in chaotic way. You can look at many economic exponential curves and see the same chaotic behavior...the WTI price...global GDP in current dollars...the Dow Jones...and soon global debt?
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Re: The ETP model was wrong - But is there a top for oil pri

Unread postby onlooker » Fri 18 May 2018, 00:57:20

To prove it I would have to prove that the laws of physics determines the future of the economy

The problem is Yoshua, that economics being governed by the laws of Man, is subject to overt and covert manipulation. Thus, the economic chaos is reflective of that. But economic artifice cannot change or IMPROVE the basic biophysical underpinnings of energy resources or other resources
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