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PeakOil is You

PeakOil is You

THE Demand Destruction Thread Pt. 2

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

Who goes without oil?

Unread postby Spanktron9 » Tue 17 Jun 2008, 09:13:36

First of all, thank you to this community for a reasoned (usually) discourse on this most important topic.

I have been reading, studying, lurking on this and other boards for some time, but have yet to come up with a clear answer when I explain the fundamentals of supply/demand to people with regards to peak oil. The question I get is- "If we are using 86 million barrels, and we are only producing 85 million, who is going without oil?"

Am I correct in answering a combination of:
1) Stockpile depletion
2) Demand destruction
3) Shortages and brownouts in various locales around the world

?

If that isn't the best answer, can someone enlighten me?
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Re: Who goes without?

Unread postby jlw61 » Tue 17 Jun 2008, 09:37:10

Spanktron9 wrote:First of all, thank you to this community for a reasoned (usually) discourse on this most important topic.

I have been reading, studying, lurking on this and other boards for some time, but have yet to come up with a clear answer when I explain the fundamentals of supply/demand to people with regards to peak oil. The question I get is- "If we are using 86 million barrels, and we are only producing 85 million, who is going without oil?"

Am I correct in answering a combination of:
1) Stockpile depletion
2) Demand destruction
3) Shortages and brownouts in various locales around the world

?

If that isn't the best answer, can someone enlighten me?


If we're only short 1 million barrels of oil a day, the price will go up until the demand is only 85 million or less a day. In which case the people least able to afford it (3rd world countries) will lose out and #3 kicks in for those locals to some extent but can include some really bad things (starvation, etc) depending on their reliance on modern agriculture and imported products.

However, once depletion sets in hard then each year will find more people priced out of the oil market. If it's slow, the transition will not be terrible and will give a chance for alternatives to kick in and life styles to change. If it's fast we're talking war, starvation and crashing economies (think Mad Max).

Basically, the poor are affected first but eventually everyone will be affected due to the inflationary effects that are being placed on the entire world's economy. Inflation will hit power, food, fuel, safe drinking water, and nearly every item that you buy in the stores. Eventually shortages of the aformentioned items will become the norm because depletion will be faster than lifestyle changes.
When somebody makes a statement you don't understand, don't tell him he's crazy. Ask him what he means. -- Otto Harkaman, Space Viking
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Re: Who goes without?

Unread postby pup55 » Tue 17 Jun 2008, 10:27:46

I will give you three answers, as to the question of "who is going without":

a. We've been drawing down our inventories, globally and in the US
b. The poor nations have been doing without oil
c. The really smart nations have been conserving

According to the recent BP review, the current "gap" between production and consumption is about 4 million barrels per day.

The obvious solution as to how this "gap" is being filled is to use up some of the stock we had on hand. I say "had" because globally, inventories have been drawn down over the last couple of years a lot. Obviously, this can only go on for so long before that little supply cushion runs out.

The second solution is: poor nations around the world, especially those in Africa, and in the underdeveloped nations of Asia such as the Phillipines and Bangladesh, have gone to a state of practically no oil at all. The "global shortage" thread is a good resource for this.

The third solution is, pretty big petroleum users, such as Germany and Japan, are busily retooling their economies to get along with less oil. According to the latest BP review, these two nations are down something like 5-8% in oil use, year-over-year. So, they are smarter than we are. They have convinced their business leaders and general population to cut back on oil usage, whereas we are looking for technical solutions that will mainly let us keep going like we have all along, without sacrificing.

So it is all pretty simple. The combination of these things above have roughly balanced out the gap between supply and demand, temporarily.

Of course, there is a limit to how long all of this will go on.
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Re: Who goes without?

Unread postby Spanktron9 » Tue 17 Jun 2008, 11:12:05

Thanks for the cogent responses. So it basically as I thought. I didn't realize the daily shortfall was that large though!
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Re: Who goes without?

Unread postby jlw61 » Tue 17 Jun 2008, 11:54:30

Spanktron9 wrote:Thanks for the cogent responses. So it basically as I thought. I didn't realize the daily shortfall was that large though!


And if Pup says it is, you can take it to the bank.
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Re: Who goes without?

Unread postby SoylentGreen » Tue 17 Jun 2008, 16:42:41

the countries with no natural resources and no large military force.
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Whither Peak Oil?

Unread postby thuja » Thu 06 Nov 2008, 01:17:14

Man things have changed fast in the Peak Oil world since the economic meltdown. Gas prices plummeting. Demand Destruction. Silver and Gold down huge. Doomers like Rocc and Cashmere jumping ship.

So now a prolonged recession and the likelihood of ongoing demand destruction for a while, maybe years.

So whither Peak Oil...? We were so cool for 6 months. Remember 147$ barrel oil? The depletion continues but no one cares anymore...this subject is so dead out there right now...
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Re: Whither Peak Oil?

Unread postby thuja » Thu 06 Nov 2008, 01:29:51

I agree Shanny- this issue is not only relevant- it is the pivotal isue of our time. We may be able to prolong the plateau phase of Peak Oil (or not) through recessionary demand destruction...but the consumption and depletion continues unabated.

This still is the elephant i n the room that no one wants to talk about. But with the collapse in oil and commmodity prices, Peak Oil talk is dead.
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Re: Whither Peak Oil?

Unread postby TheDude » Thu 06 Nov 2008, 01:44:34

I'm busy documenting how production is getting socked. Bit like birdwatching, I suppose - used to grab every bit of info about fuel shortages worldwide. Is this it? Others like to Find Oil (2), we see. Your human magpies at work.

I haven't even tried tabulating how all the cuts in the last two months will impact production in a few years - bet one of the real brains over at TOD will have a detailed paper soon. Love that stuff, numbers and nuts and bolts. For me peak oil is still at the top of the list, rather than arguing about whether Barack is a CFR tool etc.
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Re: Whither Peak Oil?

Unread postby thuja » Thu 06 Nov 2008, 01:51:28

I agree- but we have moved back into the fringe for now. We aren't as pertinent in the international dialogue. I mean throw us a bone MainStreamMedia! We are still relevant...lol.

In my opinion, massive demand destruction willl be the nameof the game for the next couple years as industrial production is curtailed. Dude- do you really see oil production levels collapsing any time soon...i.e. do you see the end of the plateau?
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Re: Whither Peak Oil?

Unread postby TheDude » Thu 06 Nov 2008, 02:09:03

Fringe? No way, for some real "doomer wood" :lol: here's a new piece from TOD, hot off the wires: Industry Taskforce Sounds Alarm on Peak Oil

Which of course refers to the UK consortium formed by Richard Branson etc. "Not exactly a lightweight," as they say in the movies.

UK Industry Taskforce Sounds Alarm on Peak Oil

Posted by Chris Vernon on November 5, 2008 - 7:59pm in The Oil Drum: Europe
On Wednesday 29th October 2008 I attended a press conference at the London Stock Exchange. The meeting was convened by the "Industry Taskforce on Peak Oil & Energy Security" (www.peakoiltaskforce.net) to introduce a new report: The Oil Crunch, securing the UK’s energy future.

September last year, former US Energy Secretary Dr James Schlesinger addressed the ASPO6 conference in Cork, Ireland with these words:

The peakists have won ... to the peakists I say, you can declare victory. You are no longer the beleaguered small minority of voices crying in the wilderness. You are now mainstream. You must learn to take yes for an answer and be gracious in victory.

The taskforce behind this report formed around 18 months ago.
Click to download .pdf
Wednesday's meeting proved Schlesinger right. A group of serious, respectable organisations, had just published a serious and respectable report, in a serious and respectable venue stating:

The effects of peak oil will be felt in the next five years.

The risks to UK society from peak oil are far greater than those that tend to occupy the Government's risk-thinking, including terrorism.

The UK Government needs to re-prioritise peak oil – as the impacts are more likely to arrive first – before climate change.

The Taskforce
"no longer the beleaguered small minority of voices crying in the wilderness".

FirstGroup plc – the world’s leading transport company. Annual revenue of over $5bn, 137,000 employees and carry more than 2.5bn passengers per year.

Scottish and Southern Energy (SSE) – one of the UK’s big six electricity companies.

Solarcentury – one of Europe's leading solar energy companies, specialising in design and supply of building integrated solar thermal and electric technology.

Stagecoach Group – public transport group operating bus, coach, rail and tram services. Employs around 30,000 people with extensive operations in UK, US and Canada.

Virgin – a leading branded venture capital organisation, has created more than 250 branded companies, employs approximately 50,000 people in 29 countries. 2007 revenue exceeded $22bn.

Arup – a global firm of designers, engineers and business consultants with over 10,000 staff working in 37 countries.

Foster + Partners – an international studio for architecture, planning and design.

Yahoo - a leading Internet services company.


Another step forward, but declining production is what will really grab headlines. KSA are hinting that Manifa may be delayed, which kicks in 3 years from now, pickings were thin then already. For a while I've been telling people that 2010 was when the line on the graph would be likely to head down, and not much at first. Just my WAG, given all the forecasts I've seen. Read The Prize to get an inkling of how countries react to oil supply shocks.
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Re: Whither Peak Oil?

Unread postby TonyPrep » Thu 06 Nov 2008, 03:41:42

It's not clear that demand destruction has been enough to get production and consumption back in line. The next STEO estimates, from the EIA, will be interesting since the previous one estimated consumption ahead of production for August and September, with production falling, along with consumption.

If the new STEO, next week, continues that imbalance, then oil prices will have become disconnected from market realities and stocks will be wittled away, almost unnoticed, to leave an oil shock in the brewing, even whilst our economies are contracting.
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Re: Whither Peak Oil?

Unread postby Micki » Thu 06 Nov 2008, 05:49:12

thuja wrote:Man things have changed fast in the Peak Oil world since the economic meltdown. Gas prices plummeting. Demand Destruction. Silver and Gold down huge. Doomers like Rocc and Cashmere jumping ship.

So now a prolonged recession and the likelihood of ongoing demand destruction for a while, maybe years.

So whither Peak Oil...? We were so cool for 6 months. Remember 147$ barrel oil? The depletion continues but no one cares anymore...this subject is so dead out there right now...


Doesn't change a thing.
I said back in 05 or 06 that a recession was likely to bring down demand and that the really interesting time would be when economy started picking up pace and they attempted to up production to highs again.

I did also suggest that we may see permanent cuts in US demand but that this would be offset by increasing demand from for instance Asia and Europe. But if this offset was less than the drop in US consumption, we could see a consumer fest continue in these regions a bit longer.

It's all still playing out so we just have to wait and see.
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Re: Whither Peak Oil?

Unread postby vtsnowedin » Thu 06 Nov 2008, 06:22:20

8) Well the President elect did repeatedly stated that he wants to move to energy independance. Now that he has got the job will he put someone on it that is peak oil aware and might push forward something that is usefull? For that matter is there consensus here about what the government should be doing in light of peak oil? I don't think filling bunkers with mylar packed food is a workable national strategy.
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Re: Whither Peak Oil?

Unread postby Tanada » Thu 06 Nov 2008, 06:40:13

My big concern is it appears at this point the new Administration is going to go after fossil fuel reductions in a big way. Given Peak Oil that is going to happen no matter what they do, but a side effect of this is they will be blamed for the effects of Peak Oil despite the fact that nothing they can do will keep it from happening.
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Re: Whither Peak Oil?

Unread postby waegari » Thu 06 Nov 2008, 06:45:51

vtsnowedin wrote:For that matter is there consensus here about what the government should be doing in light of peak oil?


First: telling the American public that they cannot have it both ways. That is, both energy independence and a downright continuation of the American Way of Life. I didn't get the impression that the crowds at Chicago Grant Park were much aware of that problem.

This is the bad news nobody wants to hear right now. Everybody seems to believe that thanks to Obama everything will move upward for everybody. Even though Obama in his victory speech stressed that the US is not about economic power and military might, I don't think that many people are willing to accept the conseqences and opt for austerity. Obama is supposed to end the economic crisis in a kind and gentle sort of way, with a lot of windmills and solar panels, and then it's business as usual. But there's no way that that can happen.

So if Obama is only halfway serious about energy independence, he has to tell Americans that driving and flying are out. Just to begin with.
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Re: Whither Peak Oil?

Unread postby waegari » Thu 06 Nov 2008, 06:48:29

Tanada wrote:My big concern is it appears at this point the new Administration is going to go after fossil fuel reductions in a big way. Given Peak Oil that is going to happen no matter what they do, but a side effect of this is they will be blamed for the effects of Peak Oil despite the fact that nothing they can do will keep it from happening.


Absolutely. My worst fear is the backlash from that. What sort of a president will Americans support next time around? Obama is bound to disappoint loads and loads of people if he is not 100% candid on peak oil.
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