[sparky]

.
@ step back , no worry , typical of this site ,thanks for the clarification .

I like this Peak Oil dynamic stuff , one of the things which always bugged me
was that there was a bit of a " one crisis fit all " scenario
each country will have different response to the crisis
Australia got so much coal we should be OK , bar the whining
maybe some countries will have a boom in alternative power
some will have riots and strikes
net exporters will spend more on weaponry and social bounties
net importers will have to work harder creating exports to pay for it
or become Greeks
everybody will drill more , in the most unlikely place
(there has been seismic mapping in the Paris streets, the geologic basin has some pockets of crude ,already exploited )

I don't really know , that's what make the subject so fascinating

[rockdoc123]

So my whole point in this thread was not to "discredit" the POD or rag on the ROCK, just to clarify that the POD isn't really the PO Dynamic at all, it's just the Price Dynamic – short of PO.

political issues, equipment availability, technology limitations are all part of the equation, not just price. As an example Kashagan was expected to come on stream nearly a decade ago, it hasn't for various reasons and price is not really an issue. The West Africa discoveries that were made over a decade ago have come on stream very, very slowly due to political issues. The oil in Sudan did not start to be produced until some 10 years after its discovery by Chevron, part to do with political issues and part to due with technology.

[Loki]

Short of PO, increasing demand just leads to increasing production
Short of PO, a high price just means a glut is around the corner
Short of PO, declining production in one region just means someone else fills the void
Short of PO, China doing whatever is irrelevant long term

Short of PO.

Agreed, hence my statement earlier:
"Fact is, supply is currently having an awfully hard time keeping up with demand, despite desperate price signals, and there is nothing that would suggest this situation will improve with time. It seems likely to me that physical constraints are playing a role, and perhaps the primary role, in this "dynamic."'

I think the POD is too broad---Rockman says it's been going on since the 1970s (or earlier?) and encompasses just about everything. A term that encompasses just about everything over the course of decades is just not that useful. IMHO.

More interesting is the fact that we seem to have hit a ceiling in production despite a historic price plateau. Where I appreciate Rockman's perspective is his repeated insistence that the exact date of the peak is largely unimportant. This is helpful to fend off the trolls who point to Sept 2012 (or whenever) seeing slightly higher production numbers than Oct 2007 (or whenever). The microdetailed half-truth criticism that tries to take the focus off the big picture. Oilfinder and John_A are masters at this nonsense. John_A's US oil production chart that starts in the 1990s is a perfect example---"see, production is up up up!"

[rockdoc123]

On the other hand the cost of hydrodesulfurization at Kashagan was not born by $20/barrel crude. Nor are payoffs to the Sudanese President, or the cost to replace Block Zero in Angola. Something since has played a part in all these newly energized schemes. I suspect it is $100 oil.

That is incorrect. I spent sometime reviewing opportunities in the Northern Caspian almost a decade ago. At $60/bbl Kashagan was economic irrespective of all the issues including dealing with sulphur, building ice cassons, protecting the sturgeon fishery etc. the issue has been in getting the technology right and sorting out continual fights amongst the partnership. Remember that Tengiz (also high sulphur) has been producing for a considerable amount of time....sulphur was never the issue.

As to Sudan your comment is bizarre at best. The main fields were brought back on line by the consortium called GNPOC in the late nineties after a delay of about 10 years from the time Chevron discovered them, when oil was hovering around $20/bbl. All of the subsequent major discoveries (Chinese in Block 6 and then again in Block 3 & 7) were made when oil was below $60/bbl and brought on stream with normal delays. The oil companies make no payments to the government other than the NOC Sudapet partiicpates in all of the ventures and hence gets a share of oil produced and through the PSC the Sudan government gets a large share of oil produced. Bashir was accussed of embezzling state funds (found innocent) but I can't see how that is related to the price of oil.

[Ibon]

I briefly read through this thread. Difference in importance whether POD or PO? I'll add my two cents. If there is an importance it would be in how this could impact the public.

Because of the many parameters that are included in POD, it will be difficult to present to the public a PO argument because the polarization of opinion will use the parameters of POD as ammunition either in arguing for or against a peak. This will only then result in a never ending discussion similar like we see for climate change.

Also like climate change consequences will eventually dissolve the polarity. And like climate change there results the cruel reality that the polarity dissolves when the depleted resource base prevents meaningful mitigation.

This will be a bitter pill but some of the best medicines are bitter.

This thread is really partially about us, coping with the knowledge of PO or POD decades in advance, and frustrated watching our global society collectively pinned to inertia until consequences break the impasse when it is too late.

I'll go back to my own personal denial, pinning the moths on the mounting boards that I collected last night here at Mount Totumas. I escape pretending to be a naturalist in the late 19th century.

[ROCKMAN]

Pops – “…just to clarify that the POD isn't really the PO Dynamic at all, it's just the Price Dynamic”. Hmm…a bit more IMHO. But obviously price is a big part of the picture. Again, PO doesn’t explain $145/bbl oil in 2008. Likewise it doesn’t explain $50 oil in early 2009 just as it doesn’t explain $104 oil today. The same phenomenon can’t explain the price swing. And that’s all I’m saying: it’s much more complicated than how much oil the world is producing on any given day whether that rate is at peak or not. In the late 70’s the price of oil, adjusted for inflation, rose to the level we see today. Was that because folks realized PO was just 30 or so years away? Obviously not…there were dynamics involved that had nothing at all to do with global PO. In the mid 80’s did the price of oil drop to less than 10% of what it is today because folks realized we were years away from PO? Obviously not. The dynamic of surging oil prices crushing economic vitality created that low price. And in 2008 did oil top $140 because folks suddenly realized PO was upon us? Not IMHO. And when oil prices fell over 60% just a few months later was it because folks realized PO didn’t exist?

And: “Rockman says it's been going on since the 1970s (or earlier?) and encompasses just about everything. A term that encompasses just about everything over the course of decades is just not that useful.” No: POD doesn’t encompass everything. It only encompasses the factors that effect to price of oil and its availability. This, to me, is a rather useful concept. One of the constant themes in the discussions here is how much will oil production increase/decrease? And how much oil will the US economy import in the future? And how will oil cost in the future? How can there be a meaningful discussion about these questions if one only focuses on when PO has or will occur?

And: “Because of the many parameters that are included in POD, it will be difficult to present to the public a PO argument because the polarization of opinion will use the parameters of POD as ammunition either in arguing for or against a peak” Thank you: you make my point perfectly. Why is anyone wasting their time arguing for or against a peak? Does anyone here argue with folks as to whether the sun will rise tomorrow? LOL. As I’ve repeatedly (and just again) pointed out that whenever PO happened (say 2005) or will happen (20XX) it has had no direct bearing on the price of oil: 2008: $140+; 2009: $50; 2013: $100+. So again I ask for a poll: who cares about the date of PO more than the price of oil? Who thinks the date of PO has a direct relationship to the price of oil? Do folks think that the increase in US oil production is due to PO or due to the increase in the price of oil?

It seems some folks can’t get away from the thought that it’s either PO or the POD…pick one. PO is one of the components of the POD. But there are others, such as economic vitality, which have a much greater influence on the price and availability. That tells me some folks can’t begin to understand the true relationship between resource development, prices and geology. PO is the date on which the world will never produce more oil than it does on that date. No more…no less. PO doesn’t determine the price of oil. I’ve just proved that by pointing out the almost $100 per bbl range the price of oil has gone thru in just the last few years. To argue otherwise is to argue that PO caused $140+ oil or that the non-existence of PO caused $50 oil. Sorry…you can’t have it both ways.

As far as being difficult to present the POD to the public I don’t see how dumbing down the story helps or future. Would it be better the next time gasoline process spike up for the public to blame oil companies and speculators or to understand the relationships that encompass the POD? IOW if the public doesn’t grasp the entire picture why should we expect them to elect politicians who grasp the entire picture? And if we don’t have a political base that understands the situations and reacts accordingly why would expect meaningful change?

And Ibon make a great point: "This thread is really partially about us, coping with the knowledge of PO or POD decades in advance, and frustrated watching our global society collectively pinned to inertia until consequences break the impasse when it is too late." Exactly. As I've pointed out many time my first mentor was explaining the future impact of PO to me in the mid 70's. I've known about the reserve replacement issue (i.e. PO) for decades. And have watched companies struggle, often unsuccessfully, to increase our oil production base. Frustration is a very apt description. And unless our "global society" not only understand but reacts positively to the POD we'll have to wait for upheaval to break that inertia that keeps us expecting the continuation of BAU. Unfortunately I have little expectation of that happening.

[Pops]

PO doesn’t determine the price of oil.

.

[Pops]

Pops – “…just to clarify that the POD isn't really the PO Dynamic at all, it's just the Price Dynamic”. Hmm…a bit more IMHO. But obviously price is a big part of the picture. Again, PO doesn’t explain $145/bbl oil in 2008. Likewise it doesn’t explain $50 oil in early 2009 just as it doesn’t explain $104 oil today.

Of course the rising and falling price in the 70's and 80's was not because "people were/weren't worried about PO. The price will always be about supply/demand market foremost along with some fear premium. I guess the part I'm having trouble with is why you keep saying price moves of the recent past have nothing to do with PO.

--
I think it's rather simple to explain those particular dates as related to PO.
$145 oil in 08 was simply a result of low spare capacity: high demand and supply not so high. If the capacity had been there at the turn of a valve, someone would have turned it and the price would have stabilized and fallen. Doesn't need PO to happen, it can be explained lots of ways, demand increasing quicker in developing countries than producers planned for for example. But you'd expect that supply would then increase to meet the new demand wouldn't you? But that isn't what's happened, aside from US Tight, world supply has flatlined, in fact non-OPEC, non-US production has hit the skids...



The way a market works is through competition, someone is always trying to get the upper hand by undercutting someone else. If I can sell more oil for a little less per barrel I'll still make more profit, it's "Getting a bigger truck." So either all the producers in the world are now part of OPEC or there is no extra capacity to be had - 10 years after capacity started tightening and 5 years after production growth fell close to nil.

Doesn't mean PO but hard to say it argues against PO.

--
$50 oil in 09 of course was a result of worldwide recession, which falls perfectly into what we all know and love as the ol' "Bumpy Plateau." Now you can blame the recession entirely, partly or not at all on PO but oil price exuberance has preceded 90% of all recent recessions and the exuberance in the oil price as well as the depth of the recession were both fairly dramatic.

The bumpy plateau as the peak has been a central theme of PO for a while. Laherrere said way back the peak would be a bumpy plateau. Just for giggles I searched on the site and found 327 mentions of the bumpy plateau, the first mention was on 4/10/04 by yours truly quoting Laherrere, lol. I made a couple of other interesting forecasts in the same post, LOL, including this:

After this years rising cost of fuel, increased production and could well bring the glut OPEC is worried about. Look for these boards to “DieOff” and more people to buy Hummers.

My thinking, I think, was a dearth followed by a glut is BAU and at the time I thought we were still doing BAU at least for another 10 years. Turns out we weren't and the glut didn't show up. Doesn't prove we're on the peak but it sure doesn't prove we aren't.

--
And what explains today's price? It is in that same post of mine from '04, 2% annual growth in demand for oil was expected at the time (that's crude oil, not ethanol plus refinery gains), including 4-6% in Asia. Turns out we've only had .3% annual growth and that was mostly last year and mostly US Tight. Again, 9-1/2 years doesn't make a trend and doesn't prove PO but I'm thinking it leans more to than against.

How can there be a meaningful discussion about these questions if one only focuses on when PO has or will occur?

I've come to think this is a red herring. I think you keep making this argument simply because you don't think we're near peak. The minutia of who is up and who down and which refinery is going where and on and on is all interesting but it means nothing without context. PO is the context for peakers. You said one time that no one would be here talking if oil were $25 but that isn't right. I became interested soon after 9/11 when the price was $25 and it was probably around $35 when the site went live in '04.

You're implying none of the factors you are talking about were ever talked about here. Of course they were. What else is there to speculate about other than who is up and who down, the latest press release from company x, y or z and Yergin's or Rupert's latest fantasy! The thing is, it's all in the context of PO.

[sparky]

.
The price is not a marginal side issue ,it's the measuring yardstick of all transactions
it is a simple way of evaluating supply demand within a trading society in an energy context

money is shorthand for embedded energy
Raw materials costs are the right of access ( paying off the big guy )
plus the energy to transform , shape and distribute
the machinery , the refining process and the energy value of the wages and last but not least ,the cost of money itself

instead of performing a complex calculations , presto there is a simple number.

it means nothing by itself ,
a room full of greenbacks has not one shred of value until one go out of the room and exchange it for something else

There is temporary aberrations but cost in monetary units is the EROEI

[Loki]

$50 oil in 09 of course was a result of worldwide recession, which falls perfectly into what we all know and love as the ol' "Bumpy Plateau."

The bumpy/undulating plateau was the first thing I thought of when I read Rockman's post on oil prices during the Great Recession. Though to be fair, the undulations in early discussions on the subject were in production, not price.

Still, I don't know that anyone has posited a universal law that the price of oil will always go up post-peak. I think the concept of demand destruction has been discussed here a bit. Perhaps your Google-fu could find the earliest references to this, I can't figure out how to rank the results according to date.

Maybe it's my historical training, but I prefer to look at things at a decadal scale. I'm convinced that the chart of historical global oil production drawn in, say 2040, will show a definitive peak right now. Minor variations won't change the overall slope of the line.

When 2040 comes around and I turn out to be wrong, I'll admit error

[Pops]

The bumpy/undulating plateau was the first thing I thought of when I read Rockman's post on oil prices during the Great Recession. Though to be fair, the undulations in early discussions on the subject were in production, not price.

You're right, Loki. Laherrere predicted production would be a bumpy plateau and the price would be "chaotic." This is from a TOD/Europe interview in 2007:

But I add in the text that this [simple Hubbert] curve is to show simply what the geology can offer with the ultimate being the surface below the curve. But the supply has constraints from investment, politics, wars, insecurity and other constraints of the demand (high prices or recession). Any curve with the same surface below can fit depending the constraints. This is why I was also the first one to speak about a bumpy plateau instead of a peak.

In my mind though, the plateau has come to symbolize not just the shape of the production curve but oil/gas prices and the overall economy as well. We've been right in that $100 range for 2-3 years, The global economy, at least the old, oil-bound portion, has been stuck in a low growth rut for the same period.

The "constraints" JL talks about could certainly be described as the Peak Oil Dynamics: those things that influence production and price around the peak, actually that's what I thought ROCK was talking about at first when he said POD. But ignoring or even denying that main dynamic, the underlying curve - "what the geology can offer", is to miss - or ignore, the whole point.

--

Still, I don't know that anyone has posited a universal law that the price of oil will always go up post-peak.

That's right, too. There is a thread here somewhere where I tried to argue that the economy and so average price could actually go down after repeatedly being pounded by spiking prices. I couldn't convinced myself, mainly because for the price to fall, the economy would necessarily be falling to pieces as well and that is... uncomfortable.

Here that one is: The Price of Collapse

..
I'm hoping to see the chart in '35, '40 may be beyond my time horizon, LOL

[sparky]

.
the bumpy plateau is only the rounding of the curve
I know the Earth is a sphere , but everywhere I went , seen at my scale it was flat , mostly

on the century scale , the plateau is hardly more than an inflection of a ballistic trajectory
throw a ball in the air , for a brief moment ,at the top of the curve , gravity doesn't seems to affect it
a very brief moment

[Pops]

.
I know the Earth is a sphere , but everywhere I went , seen at my scale it was flat , mostly

Perfect


<< for a brief moment ,at the top of the curve , gravity doesn't seems to affect it
a very brief moment>>

Perfecter!

[sparky]

.
Undelying the Peak Oil Dynamic is how it will play out into politics
that one is tricky
All politics is domestic , but it overflow into geopolitics , big time
the track record of scarcity politics is either a management of scarcity or a grab by force
quite often a denial of access or interruption of transport lanes provoke violent responses

[ROCKMAN]

Pops – “But ignoring or even denying that main dynamic, the underlying curve - "what the geology can offer", is to miss - or ignore, the whole point.” I don’t think I ever “denied” geology wasn’t part of the dynamic. But back to the point I made earlier: if the “geology” is the “main dynamic” please explain how the geology produced $140+ oil in 2008 and then $50+ oil in 2009 and then $100 oil in 2013. Did the geology change that much in just a few years? I think it’s much easier to explain those price swings as well as what’s going on in the world today by analyzing all the components of the POD.

[Pops]

if the “geology” is the “main dynamic” please explain how the geology produced $140+ oil in 2008 and then $50+ oil in 2009 and then $100 oil in 2013. Did the geology change that much in just a few years?

Why? I went on at length up-thread answering that question.
If you won't hear and respond to my answer, why waste the effort?

Cheers

.

[Loki]

if the “geology” is the “main dynamic” please explain how the geology produced $140+ oil in 2008 and then $50+ oil in 2009 and then $100 oil in 2013. Did the geology change that much in just a few years?

Very strong deflationary effects from a financial panic that resulted in sharp increases in unemployment and sharp decreases in income and net wealth. Id est, demand destruction explains the bottoming out in 2009.

The interesting part of this story is that oil rebounded to a very high plateau despite the lingering economic malaise. My guess is that geological factors are playing the lead role.

[ROCKMAN]

Pops - Didn't mean to piss you off, I studied your answer in detail and IMHO it fully supports the importance of the POD over just the effects of just PO. That's why I offered you a chance to clarify. Point for point every one of your statements references some element of the POD. Again, as I asked some time ago, what exactly is there disagreement about? The POD, which includes PO, is what’s affecting the bottom line of our energy situation. You ran down an impressive list of examples pointing that out.

It has been interesting to watch all the various interpretations of what folks thought I was trying to say. The discussion seems to have turned into a debate such as: potatoes are not beef stew. No…potatoes aren’t beef stew and beef stew isn’t a potato. But beef stew contains potatoes, in my Irish household anyway. PO and the POD are not two opposing ideas. Beef stew doesn't deny the existence of potatoes. And a potato, sitting in a bowl by itself, is not beef stew.

All POD was ever meant to do is just allow a shorthand way to refer to all those factors, including PO, that affect our energy future. It’s not some new revolutionary economic theory….just three letters of the alphabet. No more…no less.