Peak Oil is You

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Is an Economic Oil Crash Around the Corner?

General Ideas

A report by HSBC shows that contrary to industry mythology, even amidst the glut of unconventional oil and gas, the vast bulk of the world’s oil production has already peaked and is now in decline, while European government scientists show that the value of energy produced by oil has declined by half within the first 15 years of the 21st century.

The upshot? Welcome to a new age of permanent economic recession driven by ongoing dependence on dirty, expensive, difficult oil—unless we choose a fundamentally different path.

Last September, a few outlets were reporting the counterintuitive findings of a new HSBC research report on global oil supply. Unfortunately, the true implications of the HSBC report were largely misunderstood.

New scientific research suggests that the world faces an imminent oil crunch, which will trigger another financial crisis.

The HSBC research note — prepared for clients of the global bank — found that contrary to concerns about too much oil supply and insufficient demand, the situation was opposite: global oil supply in coming years will be insufficient to sustain rising demand.

Yet the full, striking import of the report, concerning the world’s permanent entry into a new age of global oil decline, was never really explained. The report didn’t just go against the grain of the industry’s hype about “peak demand”: it vindicated what is routinely lambasted by the industry as a myth: peak oil ,  the concurrent peak and decline of global oil production.

The HSBC report you need to read

Insurge Intelligence obtained a copy of the report in December 2016, and for the first time we are exclusively publishing the entire report in the public interest. Read and/or download the full HSBC report.

Headquartered in London, HSBC is the world’s sixth largest bank, holding assets of $2.67 trillion. So when it produces a research report for its clients, we should listen. Among the report’s most shocking findings is that, “81% of the world’s total liquids production is already in decline.”

Between 2016 and 2020, non-OPEC production will be flat due to declines in conventional oil production, even though OPEC will continue to increase production modestly. This means that by 2017, deliverable spare capacity could be as little as 1% of global oil demand.

This heightens the risk of a major global oil supply shock around 2018 which could “significantly affect oil prices.”

The report asserts that peak demand (the idea that demand will stop growing leaving the world awash in too much supply), while certainly a relevant issue due to climate change agreements and disruptive trends in alternative technologies, is not the most imminent challenge:

“Even in a world of slower oil demand growth, we think the biggest long-term challenge is to offset declines in production from mature fields. The scale of this issue is such that in our view rather there could well be a global supply squeeze some time before we are realistically looking at global demand peaking.”

Under the current supply glut driven by rising unconventional production, falling oil prices have damaged industry profitability and led to dramatic cut backs in new investments in production. This, HSBC says, will exacerbate the likelihood of a global oil supply crunch from 2018 onwards.

Four Saudi Arabias, anyone?

The HSBC report examines two main datasets from the International Energy Agency and the University of Uppsala’s Global Energy Systems Program in Sweden.

The latter has consistently advocated a global peak oil scenario for many years — the HSBC report confirms the accuracy of this scenario, and shows that the IEA’s data supports it.

The rate and nature of new oil discoveries has declined dramatically over the last few decades, reaching almost negligible levels on a global scale, the report finds. Compare this to the report’s warning that just to keep production flat against increasing decline rates, the world will need to add four Saudi Arabia’s worth of production by 2040. North American production, despite remaining the most promising in terms of potential, will simply not be able to fill this gap.

Business Insider, the Telegraph and other outlets that covered the report last year acknowledged the supply gap, but failed to properly clarify that HSBC’s devastating findings basically forecast the longterm scarcity of cheap oil due to global peak oil, from 2018 to 2040.

The report revises the way it approaches the concept of peak oil — rather than forecasting it as a single global event, the report uses a disaggregated approach focusing on specific regions and producers. Under this analysis, 81% of the world’s oil supply has peaked in production and so now “is post-peak.”

Using a more restrictive definition puts the quantity of global oil that has peaked at 64%. But either way, well over half the world’s global oil supply consists of mature and declining fields whose production is inexorably and irreversibly decreasing:

“If we assumed a decline rate of 5%pa [per year] on global post-peak supply of 74mbd — which is by no means aggressive in our view — it would imply a fall in post-peak supply of c.38mbd by 2030 and c.52mbd out to 2040. In other words, the world would need to find over four times the size of Saudi Arabia just to keep supply flat, before demand growth is taken into account.”

What’s worse is that when demand growth is taken into account — and the report notes that even the most conservative projections forecast a rise in global oil demand by 2040 of more than 8mbd above that of 2015 — then even more oil would be needed to fill the coming supply gap.

But with new discoveries at an all-time low and continuing to diminish, the implication is that oil can simply never fill this gap.

Technological innovation exacerbates the problem

Much trumpeted improvements in drilling rates and efficiency will not make things better, because they will only accelerate production in the short term while, therefore, more rapidly depleting existing reserves. In this case, the report concludes: “the decline-delaying techniques are only masking what could be significantly higher decline rates in the future.”

This does not mean that peak demand should be dismissed as a serious concern. As Michael Bradshaw, professor of global energy at Warwick University’s Sloan Business School, told me for my previous Vice article, any return to higher oil prices will have major economic consequences.

Price spikes, economic recession

Firstly, oil price spikes would have an immediate recessionary effect on the global economy, by amplifying inflation and leading to higher costs for social activity at all levels, driven by the higher underlying energy costs.

Secondly, even as spikes may temporarily return some oil companies to potential profitability, such higher oil prices will drive consumer incentives to transition to cheaper renewable energy technologies like solar and wind, which are already becoming cost-competitive with fossil fuels.

That means a global oil squeeze could end up having a dramatic impact on continued demand for oil, as twin crises of peak oil and peak demand end up intensifying and interacting in unfamiliar ways.

The demise of fossil fuels

But the HSBC report’s specific forecasts of global oil supply and demand are part of a wider story of global net energy decline.

A new scientific research paper authored by a team of European government scientists, published on Cornell University’s Arxiv website in October 2016, warns that the global economy has entered a new era of slow and declining growth. This is because the value of energy that can be produced from the world’s fossil fuel resource base is declining inexorably.

The paper—currently under review with an academic journal—was authored by Francesco Meneguzzo, Rosaria Ciriminna, Lorenzo Albanese, Mario Pagliaro, who collectively conduct research on climate change, energy, physics and materials science at the Italian National Research Council,  Italy’s premier government agency for scientific research.

According to HSBC, oil prices are likely to rise and stabilize for some time around the $75 per barrel mark. But the Italian scientists find that this is still too high to avoid destabilizing recessionary effects on the economy.

The Italian study offers a new model combining “the competing dynamics of population and economic growth with oil supply and price,” with a view to evaluate the near-term consequences for global economic growth.

Data from the past 40 years shows that during economic recessions, the oil price tops $60 per barrel, but during economic growth remains below $40 a barrel. This means that prices above $60 will inevitably induce recession.

Therefore, the scientists conclude that to avoid recession, “the oil price should not exceed a threshold located somewhat between $40/b [per barrel] and $50/b, or possibly even lower.”

More broadly, the scientists show that there is a direct correlation between global population growth, economic growth and total energy consumption. As the latter has steadily increased, it has literally fueled the growth of global wealth.

But even so, the paper finds that the world is experiencing: “declining average EROIs [Energy Return on Investment] for all fossil fuels; with the EROI of oil having likely halved in the short course of the first 15 years of the 21st century.”

EROI is the total value of energy a resource can generate, calculated by comparing the quantity of energy extracted, to the quantity of energy put in to enable the extraction.

This means that overall, despite total liquids production increasing, as the energy value it generates is declining, the overall costs of extraction are simultaneously increasing. This is acting as an increasing geophysical brake on global economic growth. And it means the more the economy remains dependent on fossil fuels, the more the economy is tied to the recessionary impact of global net energy decline: “The chance of future economic growth matching the current trajectory of the human population is inextricably bound to the wide and growing availability of highly concentrated energy sources enjoying broad applicability to energy end uses.”

The problem is that since the 1980s, the share of oil in the global energy mix has declined. To make up for this, economic growth has increasingly had to rely on clever financial instruments based on debt: in effect, the world is borrowing from the future to sustain our present consumption levels.

In an interview, lead author Francesco Meneguzzo explained:

“Global conventional oil peaked around the year 2005. All the following supply increase was due to unconventional oil exploitation and, since 2009, basically to U.S. shale (tight) oil, which in turn peaked around March, 2015.

“What looks like to be even more important, anyway, is the fact that global oil supply has failed to keep the pace with the increase in total energy consumption, which ‘natural’ growth requires to be approximately proportional to population increase, leading to the decline of the oil share in the energy mix. While governments have struggled to fuel their economies with ever increasing energy supply, other sources have steadily replaced oil in the energy mix, such as coal in China. Yet, no other conventional source has proved to be a valuable substitute for oil, hence the need for debt in order to replace the vanishing oil share.”

On a business-as-usual trajectory then, the economy can quite literally never recover — unless it transitions to a truly viable new energy source which can substitute for oil.

“In order to avoid the [oil] price affordable by the global economy falling below the extraction cost, debt piling (borrowing from the future) becomes a necessity, yet it is a mere trick to gain some time while hoping for something positive to happen,” said Meneguzzo. “The reality is that debt, basically as a substitute for oil, does not work to produce real wealth, as apparent for example from the decline of the industry value added as a percentage of GDP.”

Where will this end up?

“Recently, debt has started shrinking, basically because it has failed to generate real wealth. Assuming no meaningful (and fast) transition to renewable energy, the economic growth can only deteriorate further and further.”

Basically, this means, Meneguzzo adds, “delocalizing manufacturing to economies using local, cheaper and dirtier energy sources (such as coal in China) as well as lower wages, further shrinking domestic aggregate demand and fueling a downward spiral of deflation and/or debt.”

Is there a way out? Not within the current trajectory: “Unless that debt is immediately used to exploit renewable sources on a massive scale, along with ‘accessories’ such as storage making them as qualified as oil, social and political derangements, even before an economic crash, look to be unavoidable.”

Crisis convergence

Seen in this broader scientific context, the HSBC global oil supply report provides stunning confirmation that for the most part, global oil production is already in post-peak ,  and that after 2018, this is going to manifest in not simply a global supply shock, but a world in which cheap, high quality fossil fuels is increasingly hard to find.

What will this mean? One possible scenario is that by 2018 or shortly thereafter, the world will face a similar convergence of global crises that occurred a decade earlier.

In this scenario, oil price hikes would have a recessionary affect that destabilizes the global debt bubble, which for some years has been higher than pre-2008 crash levels, now at a record $152 trillion.

In 2008, oil price shocks played a key role in creating pre-crisis economic conditions for consumers in which rising living costs helped trigger debt-defaults in housing markets, which rapidly spiraled out of control.

In or shortly after 2018, economic and energy crisis convergence would drive global food prices up, regenerating the contours of the triple crunch we saw ravage the world from 2008 to 2011, the debilitating impacts of which we have yet to recover from.

2018 is likely to be crunch year for another reason. Jan. 1, 2018 is the date when a host of new regulations are set to come in force, which will “constrain lending ability and prompt banks to only advance money to the best borrowers, which could accelerate bankruptcies worldwide,” according to Bloomberg. Other rules to come in play will require banks to stop using their own international risk assessment measures for derivatives trading.

Ironically, the introduction of similar well-intentioned regulation in January 2008 (through Basel II) laid the groundwork to rupture the global financial architecture, making it vulnerable to that year’s banking collapse.

In fact, two years earlier in July 2006, David Martin, an expert on global finance, presciently forecast that Basel II would interact with the debt bubble to convert a collapse of the housing bubble into a global financial conflagration. Just a month after that warning, I was told by a former senior Pentagon official with wide-ranging high-level access to the U.S. military, intelligence and financial establishment that a global banking collapse was imminent, and would likely occur in 2008.

My source insisted that the event was bound up with the peak of global conventional oil production about two years earlier (which according to the U.K.’s former chief government scientist Sir David King did indeed occur around 2005, even though unconventional oil and gas production has offset the conventional decline so far).

Having first outlined my warning of a 2008 global banking collapse in August 2006, I re-articulated the warning in November 2007, citing Martin’s forecast and my own wider systems analysis at a lecture at Imperial College, London. In that lecture, I predicted that a housing-triggered banking crisis would be sparked in the context of the new era of expensive fossil fuels.

I called it then, and I’m calling it now. Some time after January 2018, we are seeing the probability of a new crisis convergence in global energy, economic and food systems, similar to what occurred in 2008.

Today, we are all supposed to quietly believe that the economy is in recovery, when in fact it is merely transitioning through a fundamental global systemic phase-shift in which the unsustainability of prevailing industrial structures are being increasingly laid bare. The truth is that the cycles of protracted economic crisis are symptomatic of a deeper global systemic process.

One way we can brace ourselves for the next crash is to recognize it for what it is: a symptom of global system failure, and therefore of the inevitable transition to a post-carbon, post-capitalist future. The future we are stepping into simply doesn’t work the way we are accustomed to.

The old, industrial era rules for the dying age of energy and technological super-abundance must be re-written for a new era beyond fossil fuels, beyond endless growth at any environmental cost, beyond debt-driven finance.

This year, we can prepare for the post-2018 resurgence of crisis convergence by planting seeds — however small — for that future in our own lives, and with those around us, from our families, to our communities and wider societies.

Nafeez Ahmed is an investigative journalist and international security scholar. He writes the System Shift column for VICE’s Motherboard, and is the winner of a 2015 Project Censored Award for Outstanding Investigative Journalism for his former work at the Guardian. He is the author of A User’s Guide to the Crisis of Civilization: And How to Save It (2010), and the scifi thriller novel Zero Point, among other books.


40 Comments on "Is an Economic Oil Crash Around the Corner?"

  1. paulo1 on Wed, 11th Jan 2017 9:01 am 

    Excellent article. Certainly, debt has been used to replace cheap energy and succeeding only in delaying the inevitable. People, including all relatively rich westerners, will have to live more restrained and simpler lives. “No Jimbo, you don’t really need to drive a Lincoln to feel good about yourself. And Billy, you might have a 3400 sq ft house, but you still work at a grocery store and can’t afford dick-all if the truth be told”.

    I live in western Canada and people here, at least those who are working, live insane lives of consumption and false needs. They are not happy as far as I can see. I see kids rewarding themselves with all-inclusive tropical vacations while in debt up to their eyeballs.

    As this unfolds look for major paradigm shift in society; after increased substance abuse, bankruptcies, and family violence.

  2. Davy on Wed, 11th Jan 2017 9:47 am 

    Very good article covering many issues we grapple with daily here on this board. Basically we have a converging crisis from depletion and a corresponding multidimensional demand destructive economic crisis slowly unfolding. The economy has no real solution other than a recession or depression to rationalize years of mal-investment. The reason this is not happening is the scale is too large to recover from as-is and no one is willing to see a dangerous new reality of some kind of collapsed global world. This collapsed global world will likely include failed states and failing geopolitical structures. Networks and systems that support all global nations may go dysfunctional most likely currencies and banking will destabilize dramatically lowering economic activity.

    Energy is in depletion in economic quality and the energy industry and energy nations are being gutted from years of bellow required investment. This is a human and an infrastructure problem as well as a resource issue. The alternatives that need to come on-line immediately suffer from multiple issues of energy performance both physical and abstract. The scale of the change is likely too quick and too dramatic to succeed. I say this because the needed transition is being accompanied with a global economy that is not up to the task. If this were not the only issues but instead almost all other human and environmental metrics are poor or in dramatic decline. This all points to a period of crisis and or crisis event.

    The dangerous nature of this period is we are somewhat blind to its approach because of the unprecedented economic and financial repression. Artificial liquidity and moral hazard policies of extending and assimilating bad debt into new debt is the primary policy of choice. Liabilities are going unfunded as promises that will never be met leading people to make decisions that are not sound. We are also blinded as a people believing the techno optimist that an alternative energy future is possible with our as-is world. In fact most proponents of alternative energy are grandiose with the future marketing a much better future. They are pushing extreme technology instead of focusing on the simple and effective. This all points to a very bad period of a poverty of unmet physical needs combined with a failed social narrative that all will be well. This along with overpopulation and ecological destruction could leave the world in a dangerous cycle of social decay and violence.

    All is not lost because we still have time. It is possible a crisis will focus behavior and we will see real change. Unfortunately most of the worst that is coming is unavoidable. We can mitigate some of what is coming. Some will be adapted to eventually. The lion share of years of bad behavior will not be walked away from. We may be facing a die off if we are not careful. This time in our history is probably a time of being the biggest lie humans have ever created. This is amazing considering all the scientific advances and the ability of the internet to spread real news. Instead we are a people in deep denial and more concerned about unimportant news or fake news. Everyone else is to blame and everyone has an answer if they were in charge. The only answer is less and no. No one wants to hear that so we will get the change we don’t want through lies and denial.

  3. Midnight Oil on Wed, 11th Jan 2017 10:58 am 

    May face a die off if we are not careful?
    Once the magic pellets go to grow our food and the means to moved it around and prevent it for spoiling….well you get the picture.
    Alot of angry folks expecting their daily meals from Burger King. Mikkie D’s, KFC and Wendy’s will be in for the die off.
    What a surprise!

  4. dave thompson on Wed, 11th Jan 2017 11:27 am 

    To sum this article up; Endless growth on a finite planet as a system of economy will eventually fail. Or as Schtienberg Alectson stated; Energy inputs + or – = economic outputs + or -.

  5. Aspera on Wed, 11th Jan 2017 11:55 am 

    @Dave, Well yes, of course. But haven’t you gone from Occam’s Razor to Occam’s lobotomy?

    First, the details of what’s happening matter if there’s even a chance of our helping people to respond better than they would otherwise. Second, persuasion of normal people (i.e., not us “experts” who live and breathe this stuff) needs us to build a case, let the info sink in and integrate with the rest of their 10^14 neuronal connections. After all, messing with such complex systems can produce all sorts of unintended and unexpected results. Some good, some not so much.

  6. dave thompson on Wed, 11th Jan 2017 12:04 pm 

    Aspera, I made no mention of Occam Razor. The details are all there to see for anyone willing to look, at this point. Down the road the details of humanities predicament will be all to apparent and impossible to ignore.

  7. baha on Wed, 11th Jan 2017 12:26 pm 

    Doesn’t this sound strangely like the ETP model?

  8. Dredd on Wed, 11th Jan 2017 12:48 pm 

    Is an Economic Oil Crash Around the Corner?

    That depends on what an “Economic Oil Crash” is and where or when “Around the Corner” is.

    There are bigger crashes and corners to consider (The Exceptional American Denial – 2).

  9. Davy on Wed, 11th Jan 2017 12:57 pm 

    Baha, yeap, I have often said if you don’t get too particular about the ETP model the dynamics behind it express very well what is going on globally. The problem with the ETP model is it tries to model something too complex for any model and its modeling is too detailed. They are mixing in the irrational of humans and their economics into a mathematical equation where it does not belong. How rational is price anymore especially since global economics is now a Ponzi and driven by one bubble after another. Normal price discovery has been altered for good by repression and easing.

  10. Simon on Wed, 11th Jan 2017 1:09 pm 

    Bumpy Plateau

    Prices Rise, consumption falls – 2008
    Prices Fall, consumption rises – 2016
    Prices Rise, consumption falls – 2018 ?

    question is, when is the decline so obvious it cannot be ignored

  11. SRSrocco on Wed, 11th Jan 2017 1:18 pm 


    Pardon my French, your statement is completely FOS. The ETP OIL MODEL is quite accurate in forecasting what will unfold.

    What is total rubbish is the notion that the system is too complex to understand.


  12. Davy on Wed, 11th Jan 2017 1:28 pm 

    Steve, I am debating the degree of accuracy concerning price and the ETP model. I am saying this because of the irrational aspects of price and human nature. You are acting just like the global central banks and their hubris. They like you think they got it all figured out and look where we are. If you think global economics and the oil complex can be modeled completely you need some help.

  13. Northwest Resident on Wed, 11th Jan 2017 1:40 pm 

    If HSBC is publishing this info for their clients, then the cat is officially out of the bag. It is a clear indication that the “end” is near enough that it really doesn’t matter one way or another that the real, devastating truth is finally admitted. All of us regulars on this forum have known what HSBC is stating as fact for a long time, but the deniers had plenty of propaganda to back up their alternate (and false) version of reality. Reality is getting very difficult to deny these days, and even more so with this HSBC report hitting the digital airwaves.

    Meanwhile, Mexico is on the verge of revolution, Venezuela is gasping for air, fires are burning all around the globe, Turkey currency is crashing hard, and:

    World Faces Rising Risk Of Conflict: US Intel Report Admits “Era Of American Dominance Drawing To A Close”

    And the “fun” is just getting started.

  14. Ghung on Wed, 11th Jan 2017 1:41 pm 

    Hubris? Got it all figured out? This from the guy who insisted that Clinton would have started WW3. Meanwhile, Trump’s pick for Secretary of State just said he would have used military force in response to Putin’s annexing of Crimea. Suckers…..

    At least Steve, et al, are working the problem instead of buying all the bullshit that’s out there.

  15. Aspera on Wed, 11th Jan 2017 1:46 pm 

    @Dave. Sorry. Perhaps I lobotomized your comment. But when I read your summary of the entire article as, “… Endless growth on a finite planet as a system of economy will eventually fail. Or as Schtienberg Alectson stated; Energy inputs + or – = economic outputs + or -” it sure came across to me as an Occam’s lobotomy.

    For me anyway, the process (i.e., temporal dynamics) matter a lot.

  16. SRSrocco on Wed, 11th Jan 2017 1:58 pm 


    I thought you understand the fine art of war, via political diplomacy.

    Exxon CEO likely stated that as he was next in line behind Trump as a Putin supporter. His response was more as a diffusion tactic.

    I am surprised that had to be explained to you.


  17. SRSrocco on Wed, 11th Jan 2017 2:02 pm 


    My fault in addressing that comment towards you. I misunderstood your comment when I first read it.

    I see you are one of the few out there that hashe a brain working correctly.


  18. makati1 on Wed, 11th Jan 2017 5:59 pm 

    We are in a slow motion crash at this moment and have been for the last 8 years. When that realization hits the brain cells of the masses is when the coyote falls out of the sky. Are YOU prepared?

  19. Davy on Wed, 11th Jan 2017 6:26 pm 

    Ghung, back to you whining about the election. Get over it and move on you are just making yourself sick.

  20. dave thompson on Wed, 11th Jan 2017 6:33 pm 

    Aspera, temporal dynamics and Occum’s lobotomy, maybe we should right a song?

  21. Cloggie on Wed, 11th Jan 2017 6:45 pm 

    No problem with seeing Ghung letting off steam a little more.

  22. Cloud9 on Wed, 11th Jan 2017 7:38 pm 

    So, the wheels come off in 2017. Is that what I am hearing? No Mak I am not ready.

  23. Aspera on Wed, 11th Jan 2017 7:47 pm 

    Dave. Got it. Music made by hand (or solar powered?).

    The band is Occam’s Lobotomy.
    First album is Peak Oil Blues.

    So far we have:
    Temporal dynamics.
    Seneca cliff.
    OilDrum ELM.
    Hubbert’s lament.
    Kunstler two-step.

    (Maybe Ghung will host a summer fest at the farm and invite us to play?)

  24. GregT on Wed, 11th Jan 2017 7:56 pm 


    Trump isn’t the saviour that you make him out to be. If I was a religious man, I’d be more likely to call him the Antichrist.

  25. Harquebus on Wed, 11th Jan 2017 8:18 pm 

    This articles warns of the recessionary and inflationary effects of crude oil prices increasing but, when advocating the implementation of “renewable energy” does not factor those effects.

  26. Wolfie52 on Wed, 11th Jan 2017 8:34 pm 

    At least lately I haven’t had to see Plantgen’s idiotic comments and moronic GIF.

    Start living in the real world people.Get out of this “bubble” and just live your life. SHeez.

    Kunstler has been wrong ad nasuem. Yes, changes are coming and will happen, but probably nothing like you expect. You can chose to die in these sort of chat rooms, drinking the swill, or you can live…up to you,

  27. Davy on Wed, 11th Jan 2017 8:47 pm 

    Wolfie, reminds me of the guy that try’s to save a woman being abused only to find out she likes it. Maybe we like the doom and gloom, Wolf.

  28. makati1 on Wed, 11th Jan 2017 9:05 pm 

    Wolfie, what is your definition of “live”? As a serf/debt slave in the Fascist Police State once known as America? What “life” do you “live”? Workin’ for the man(government/bank/elite)?

    Dsvy is correct (Yes, I know…). Maybe we enjoy sharing our personal view of the world and it keeps our brains cells from marinating in the propaganda Koolaid sucked up by you all. Move on if you don’t like the company here. You will not be missed.

  29. GregT on Wed, 11th Jan 2017 9:21 pm 


    “or you can live…up to you”

    If only you had the slightest clue…….

    Life is grand. Probably much better than you could possibly ever envision. 🙂

  30. Truth Has A Liberal Bias on Thu, 12th Jan 2017 1:30 am 

    “Following our graph, which we are 99% confident is accurate, oil prices by 2020 will be about $208/barrel, or $6.88/gal for transportation fuels. This is probably survivable, but by 2025 those prices will have advanced to $329/barrel and $10.90/gal.”

    Wow that’s some model. What it says is all over the fucking place. Short just makes shit up. He admitted as much in a thread called Etp Q&A

  31. Truth Has A Liberal Bias on Thu, 12th Jan 2017 1:32 am 

    Trumps a fucking retard.

  32. GregT on Thu, 12th Jan 2017 2:03 am 

    “Trumps a fucking retard.”

    Actually THALB, Trump is the president elect of the most powerful nation on Earth, and a multi-billionaire. You are a nobody in comparison to The Donald™. Nothing, NADA, zip, ziltch, zero.


  33. sidzepp on Thu, 12th Jan 2017 3:48 am 

    I listened to the President elects press conversation yesterday and reinforced the opinion that he is extremely adept at not answering any question. He didn’t say a damned thing. Unfortunately, while listening to the comments of his biggest supporters here in Clanhandle of Florida the realization came is that his base support is from people who can only bits and fragments of news. It is impossible to find many people who will sit down and seriously discuss any topic. Whether it be building a wall, punishing China with trade sanctions, or the genocide of all Muslims, there is a strong support for this man who will “make America great again.”

    In my opinion there will be growing cooperation between the Russian Federation and the U.S. in curbing the expanding desires of China and India and as both countries are in the need of external resources to continue their growth, the combination of the two U.S. and Russia will create a situation where you will soon see great instability in China and India.

    Of course this matters no since the economic model we have created for the last two hundred years is built on a house of cards and will begin a rapid collapse in the next ten years.

    My only hope is to drive next to the base when the nukes begin to fly!

  34. Davy on Thu, 12th Jan 2017 5:15 am 

    Have you heard any politicians that does say much of anything? I mean I can’t name any except maybe Putin but he is the wrong country. Globalism’s extremes needs to be halted. These extremes are causing more harm than good. Bring on the trade wars. Look around at all our unhappy affluence globalism has brought. No one can imagine good coming out of less but eventually on a finite planet less happens. Trying to get more when less is due is just making a delayed less, a worse. I don’t believe sustainable development is possible from modern man. The only thing modern man understands is a good depression. A depression will bring back good behavior and make us strong again that is if we survive it.

    Trump is going to fail because no one is going to make anyone great again. Putin made Russia great again but for how long? He is just a man who will fade away then what? If Trump’s slogan was make American less bad off then I would say he has a chance. Trump is not as much a criminal as Hillary so in this respect this election was a success. I am sure he has done something criminal. What rich person hasn’t done wrong? That is how you get rich. Someone was screwed over for someone to get rich. Trump’s political incorrectness is on the surface easy to see. Hillary is a liar by being one way with the public and another way with her cronies. I am so happy the Clinton crime family went down!

    I am delighted the corrupt and hypocritical left liberal elite mostly coastal assholes are getting their asses handed to them. I despise Hollywood elites and Silicon Valley schmucks. If there ever were a people who think their shit doesn’t stink and revel in having their cake and eat it, it is these people. Now I am glad all those intelligence agencies will likely get their shake up. They crossed Trump and now he will replace them. It looks like all those deep state conspiracy theories were just imagination. We have a world of fake and unimportant news so I am glad to see the corrupt media will get their whipping. The assholes in the conservative elite are getting their thumping too. The neocons multiyear plan is in tatters. What is not to like about this Trump whirlwind. Trump sucks but he sucks in a good way at least for now. I know all this fun won’t last and Trump will makes some bad moves so just be patient Trump haters.

    We need immigration controls and profiling because the other way did not work. I believe in giving people a chance but when that does not work then do what works. Shrink the borders because the last thing we need now with a broken country is more people to make it more broken. I doubt Russia will turn its back on the Brics. Putin will likely mediate conflicts that are going to surface with China. Putin is the real winner in all this. The guy will go down in our soon to be short modern history as its greatest leader. My real worry with trump is NUKs and North Korea. Trump may decide to attack them before they build and deploy 20 NUK tipped ballistic missiles that will put the west coast in range. Trump may have taken Russian NUK war off the table but I am not sure with North Korea or Iran. I doubt there will be war with China. Trump may even come to some kind of grand military and economic bilateral arrangement with China. Trump knows China is too important economically to get in a battle with. That is my take for what it is worth. It’s not worth much but take this to the bank globalism is dying and Trump is pulling some plugs to make it quicker.

  35. Davy on Thu, 12th Jan 2017 5:51 am 

    “FBI Reportedly Sought FISA Court Warrant To Spy On Trump Campaign Officials”

    “A new report released today features both the FBI seeking to launch a surveillance operation against an active US presidential campaign, and the ultra-rare case of the FISA courts actually turning down an FBI request to conduct surveillance against somebody. The report, originating at the Guardian, claims that the FBI had sought broad surveillance powers over four high-ranking members of President-elect Donald Trump’s campaign during the election, claiming them to have had contact with Russian officials.”

  36. shortonoil on Thu, 12th Jan 2017 8:42 am 

    “Doesn’t this sound strangely like the ETP model?”

    Yes it does, but HSBC and almost everyone else is still missing one critical component. The energy to produce petroleum and its products is growing by 2.33% per year (1,823 BT/gal). That is, all of the demand growth presently being witnessed is coming from the petroleum industry itself. It will continue to grow as long as production does not decline. Once production begins to decline (which may come for a variety of reasons) demand will decline with it. That will pressure prices downward as we show on this page:

    This is very reminiscent of our late 2012 realization that prices could not advance forever as was commonly assumed at the time. Once the energy to produce petroleum and its products became greater than the energy it delivered to the rest of the economy the price had to stop going up, and start going down. That cycle began in 2012, and materialized with a vengeance in 2014. The effect is still in place. As the industry continues to contract, as it is now doing, demand will decline, and so also will the price; which will produce more decline in demand. There will not be any skyrocketing prices because of a supply shortage. There will just be an economy in the dumpster that will never recover.

  37. Boat on Thu, 12th Jan 2017 12:44 pm 

    Some people would say the price of oil went down to $27 and then skyrocketed to over $55. So much for short.
    I remember when oil demand was reported dead even though it kept climbing 1.3 Mbpd for the last 5 years which is about average since 1950. Hey, guess what, renewables has it’s on place on the energy charts now. No longer over shadowed by hydro. Remember when renewables were stuck at 1 percent. Now up to 8 in the US.

  38. roccman on Thu, 12th Jan 2017 1:09 pm 

    hmmm…good article, but why now?

    Number 1: I take issue somewhat with the “cause” of the 2006 housing collapse – you will not the Fed Fed Rate was being stairstepped up from 2004-2006 – precisely at the time conventional oil was peaking. With ARMS associated with most housing loans – independent of gas price – the housing market was set to collapse.

    Number 2: The peaking of oil is a temporary condition temporarily. You think those with real power won’t skeletonize the entire planet to keep projects like CERN alive and well? Think again. Cracking the code on the nature of light is the agenda to get out of Shiva’s endless enslavement in this material dimension. Starve/war some and match geologic declines with demand – rinse and repeat.

    Number 3: no discussion of war – at that is what keeps us slaves busy while a “light” raft is built at CERN or China’s proposed particle collider in the early 2020-25.

    Number 4: would be a good time to read Tolstoy’s Epilogue #2 of War and Peace for a more complete picture of the nature of teh agenda – Hint: Egregore Building

  39. GregT on Thu, 12th Jan 2017 2:02 pm 

    “Some people would say the price of oil went down to $27 and then skyrocketed to over $55.”

    And other people would say that oil went from $16.74, then skyrocketed to $154.38, before ending up at ~$50 today. (in inflation adjusted dollars of course)

    Those other people would be correct. The some people in the former category above are ignorant of reality.

  40. shortonoil on Thu, 12th Jan 2017 3:10 pm 

    As it turns out price does not appear to be the controlling factor in determining which way oil prices are going to move. It is a little more complicated than just price. Price is only one factor driving the cycle that shows up as declining and rising price. In an attempt to reconcile the energy dynamics with the economic ones we have taken a look at a number of metrics. From an economic perspective the primary one is the ratio of Total Crude Cost to GDP. In every case over the last 57 years when that ratio exceeded 3.3% or fell below 1% the price movement reverted, and followed a 6.5 year cycle (down or up) afterward.

    Since I can not post a graph here to show you, and that graph is not yet on our site I’ll put one over at that the ETP Model, Q&A forum for anyone who may be interested.

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