there have always been refinery shutdowns, this hurricane season is no worse than any other, and I grew up with 10,000 Soviet nukes aimed at my backside. But right now petroleum prices are going nuts. So you tell me?

well as I said ...it is difficult to actually tell how much is due to supply and demand issues....if you think you know better than anyone else pstar then I would suspect you could make a killing from the options market.

The fact is that we do not currently have a supply issue....look at the numbers we are in the top end of normal storage for oil and distillates and we are likely to see a build in both this week again. We have had less storage and the price has been lower. The issue is fear of the future. If there is a bust in supply and demand currently it has to do with refining not physical arrival of crude to the market.

And I seem to remember reading this is the first time there has been two force 4 hurricanes in the first month of normal hurricane season....the market is on pins and needles. Look at the daily movement in both petroleum commodities and oil and gas shares....more volatility than we have seen in years. This speaks to uncertainty and when the market is uncertain terrorist threats become potential market movers. What do you think would happen to oil supply if the radical fundamentalist groups in Saudi were able to blow up refineries/terminals at Ras Tanura and Yanbu or the pipeline by Shaybah to Abqaiq?

My question for you is if the issue is one solely of supply and demand then why is the oil price so high when we have higher storage than in a number of years?

While the US market can afford the going rate for the oil it is going to be able to build stocks more often than not for some time to come. It's places that can not afford the high prices that will see shortages, real shortages ie. people will be unable to afford to continue their standard of living and public services will not be able to provide their usual level of service. This is going on right now in some parts of the world. Demand Destruction. To add to this, the US has agreements in place with suppliers which will preferentially trade with the US.

Oil shortages will happen in the US market only once the US consumers/industry/government can no longer afford the going rate, there is a physical embargo, or suppliers choose to preferentially sell their product to alternative markets.

HAHAH ok its just a conspiracy then.....

The biggest and best godamn conspiracy ever!!!!

Go back to your homes!!!
There is nothing to see here but a bunch of idiots discussing Oil and energy

Mike - hmmm 2 Opec nations at war - isnt that just a little different then the worlds largest eco/military power nesting near most of the oil?

I feel better knowing that the USA has 150k G.I.'s in place in the middle east and its oil - even though I am ultimately against our "evil empire" and its practice of creating and then filling vacuums.
Seems to me that the markets would be "happy" about this developement as well.

Oh.... prices have been up since $13 a barrel in 2000 thanks.

Yeah we need more data - more studies need to be done - many years from now we will know exactly what went wrong or right.
Maybe at that time - Once its far too fucking late - these "great" minds will have their heads out of their collective ASSES just long enough for someone like myself to come along and chop them off

I really do not get the point of these anti doomers and I am getting this paranoid feeling that when I do get it (their point) it will be in my back in the shape of a sharp object as they desperately try to find food to feed their fat overly educated non peak oil believing faces....amen

and the meek shall inherit the earth

Like others have said, with such foresight and conviction u should invest
right now and make enough for a warehouse of MREs.

But like the rest of the human race- even traders and "experts"- u really
have no more insight or evidence than the rest of us. You just have
conviction. Big deal.

Considering that none of the events u cite are either individually
or collectively different from any other time of shortages/price hikes,
all that is left is your crystal ball and possible psychological need
for doom. Maybe then you'll be happy.

The "evidence" cited by Lynch and others is based on
absolutely crap data. Half of it actually state secrets of government
and whatever public data is available is distortions, half truths, lies and revisions as well as enormous gaps. Those people compiling data for
their own analyses are wasting their time. Even the data appearing in
the professional journals and annual reports is BS.

Then there is the mindboggling technical complexity of oil finding, extraction, processing and distribution- all of which create uncertainties
of their own.

EVEN with good data and concensus of analysis a PO estimate would
have an error factor of 5-10 years. That's why the estimates are so
wide.

Yet because (in your possibly young life) you now see oil prices
(possibly for the first time in your life) reaching painful levels, you
have the ability to infer the end of the world with incredible certainty.

Look, invest now if you're really sure. That's the test of your convictions,
not investing in MREs you can spoon down as they expire.

If you really know, why tell us? Seems you got a plan. Go for it bro.

Mike--

I think you've misunderstood the concept of EROEI. I understand that in the real world, profits dictate which projects come online and which don't. However, the cost in economic terms has no bearing on EROEI. Energy Returned on Energy Invested. Not Energy Returned on Money Invested. The reason why it's useful and very relevant is this: We're depleting our energy resources (at whatever rate you decide it's happening, it IS happening). We use energy to produce energy. Producing energy from "unconventional" sources uses more energy per amount of energy returned. Our net energy is going down at the same time as our production and consumption of energy is going up. That's alarming...

The rise in prices has made certain projects economically viable that weren't before (i.e. tar sands in Canada). but the price of the commodity on the market has absolutely no effect on how much energy it takes to make the commodity available. we are using what's left of our economically recoverably energy to produce... what's left of our economically recoverable energy... at decreasing rates of return. yes, more and more energy will become economically recoverable as the price increases, but it will take more and more energy to produce.

The area where I do agree with you is the uncertainty of the timing. and I think you, me, Matt Simmons, and Colin Campbell can all agree on something too... The data we have is very poor... different companies and agencies are reporting different numbers in the same surveys. companies report growing reserves to make investors confident. the fact remains--we don't know exactly what's going on, and we can't accurately predict the future with spotty data.

Prices ever going back down is unrealistic, in my opinion. Projects like ultra-deep water and tar sands are only coming online because the high price of oil means companies can profit from them. If the price of oil starts to go back down, non-conventional sources are going to be money losers and will go offline. If prices go down, demand supposedly goes up (or at least continues to rise at current rates) but supply actually goes down due to projects going offline because they're no longer profitable. based on simple supply and demand--this contradicts the lowering of prices.

Regardless of when you think the peak will actually occur--one thing you can't really argue away is that the only long-term solution is MASSIVE demand destruction. Like 2 or 3% per year--starting NOW. Maybe 5 or 7% per year in the US for the next 10 years until we're using as much per capita as the rest of the world...

Thanks for your time and your input

According to the latest Weekly World News, the industry has warned the White House that there is only 6 months of oil left. They have extensive quotes from M. T. Taanke, a Swiss economist.

The ongoing conflict in Iraq is probably keeping 1 mb/d off the market, and long-term economic sanctions have prevented Iraq from achieving its mid-term goal of 5 mb/d.

In 1980, when the Iran/Iraq War started, global inventories were huge, so prices bumped up very briefly.

I could argue that there is a conspiracy to make people think that peak oil is near, to bolster energy company stock prices, or promote subsidies for renewables, etc., etc. And the anti-doomers have a much better track record than the 'chicken littles' who keep looking at acorns and seeing a falling sky.
Mike Lynch

Class? does this guy make zero sense or is it just me?

Why do I feel as if I should attempt to re educate someone like mike lynch????

Got any gum?
It feels like Peak oil 101 in here.
I just hope to pass this class and be done with it.

At this point I do not believe you are really Mike Lynch.

Where do you get guys like doufus anyways?
Does he come with batteries and free pom poms?
Oh thats right you are just telling people like him what they want to hear.

In that case you should expect good book sales as the sheeple need a shepard and should come out in droves to buy your misguided musings.
How many sheeple would a false shepard fool if a false shepard could fool sheeple?!?!?

At any moment now I expect Debra white to take the stage with a sultry yet satirical song and dance rendition of pink floyds "bring the boys back home".

In all seriousness..... my primary goal was to show this forum how people like yourself and your gimp mouthed mini me Doofus can go from

"We dont have enough data" to " Everything is going to be fine" in 0.2 milliseconds.....

One point blue!!!

Let me know if you want more grasshopper

Could you be a little more serious please or just shut up?

We have enough data to know that we are not going to peak the coming 6 years. It's all over the internet for free, if i can trackback all those new oil projects (im at 165 + 55 at the moment) then you can so too. It just takes time.

And not having enough data on OPEC, well we have enough data. Enough data to know that if Saudi Arabia peaks. It does not mean world peak. It's very simple:

Announced projects amount for: 1.5 mb/d increase in Saudi Arabian production (not counting in Khurais)

Let us assume that 4.8 mb/d (that's a lot) of their production is declining annualy with 12% per year from 2006 on. That would be a decline from 4.8 mb/d to 2.2 mb/d in 2010. The rest (5.335 mb/d) stays stable

so we have 2.2 + 5.335 + 1.5 = 9.035 mb/d in 2010 of production.

In the meantime, we can still increase overall prod. 92.4 mb/d in 2010...

Counting in for a decline of 9 mb/d of production from 2005-2010
and a Gross increase of 17.5 mb/d (without Saudi Arabia)

What Simmons is saying, that if Saudi Arabia peaks the world peaks is not true. He just does not have a good overview. Even if the decline base would be 8.5 mb/d and 20% annually (which is impossible) it is not true.

And for ODAC's research, too little projects, and he is counting depletion wrong (it does not have to be the case that depletion increases, it sometimes actually decreases since the decline base decreases if there are no new fields going into decline.)

So will you please behave yourself and talk from FACTS or experience and not the sheep goating the "peak is near" but i do not know why....

Thanks in advance,

one more thing:

Have you ever thought of that MR. Lynch has far more experience then you? He has been thinking about modelling oil production for a LONG time. And most of his arguments are valid, especially URR being dynamic instead of static.

It's called: trying to place yourself in another person. Why he would think in that way and stuff. You should try it sometimes.

questions for spike/mike:

Do you know if there is a record on how much recovery rates have increases during oil production history?

Do you have any estimates of the maximum possible recovery rate increase over time (accounting for the time that it takes to integrate new technologies into the oil bussiness)? I read that it takes about 5 years to integrate a new technique.

Do you know if it is possible to go from an average recovery rate of 30-35% now to 35-40% within 8 years?

Do you have any idea how recovery rate increases correlate with oil production increases?

Spike/Mike

So bottom line, do you think the United States will survive as a world contendor, or will our debt cause us to collapse and the world will suddenly no longer be interested in either taking us seriously or selling oil to us?

No, my point is that energy invested appears to be a tiny fraction of energy produced. How else could you afford the energy inputs and all of the other inputs and still make a profit?
I have never seen energy invested quantified for oil, except with reference to unattainable research (an academic working paper). Can you provide me with some data and sources?

And tar sands and deepwater have been booming for a decade, well before current prices. So, they will continue to expand when prices drop, if they don't drop too far (i.e., $15).
Mike Lynch

I hate you.
Seriously, I am trying to put together a historical time line for estimates (when I'm not on this board). I haven't seen anyone else do it. A century ago, the rate was about 15% in the US. In the 1970s, it was about 33%. Now, I think it's approaching 50%. But the numbers I see are usually 'guesstimates' or references to specific fields or basins, which are not necessarily comparable with others.
The Norwegians (who have favorable geology) undertook a program to raise their recovery to about 70%, I think, but I'm not sure how successful it was (that was 5 years ago?).
There is a study done about 2000 by Smith Rea associates that talked about the UK North Sea. You might be able to find it online.
The maximum is, theoretically, pretty high, but the date is less certain. People are going back to old fields and reviving them, but it takes time and money (and yes, energy). You could, in theory, mine the stuff and squeeze out nearly every last drop, but that would undoubtedly take a lot of energy itself (and we'll probably have bioengineered farms making oil before then).
So, with the 'heaviness' of the oil as an approximate determinant, you can imagine the worst couldn't see more than 40-50% extraced, the best 70-80%. But that's a guesstimated.
Mike Lynch


Mike Lynch

Mike,

I was curious about your personal "tipping point".

What would have to occur for you to switch gears, and decide that our planet really was approaching (or had arrived) at midpoint conventional oil production?

Here is the latest (I think) oil and gas EROEI estimate for the US from Cleveland and Kaufmann: http://www.oilanalytics.org/netentop.html

Quite long but the part you want is here:





It is probably still around 10. World EROEI will of course be significantly higher than the US. I wonder if Jay Hanson will remove this graph from the dieoff site, which shows US petroleum becoming an energy sink about now: