Tanada wrote:This is a classic example of the Export Land Model in action, you can cut domestic consumption in favor of exports to a certain extent, but sooner or later you hit the wall and have to lower exports to prevent domestic unrest and potentially revolution.
The ELM is not classic. It is just another discredited peak oil related equation. And according to its author, we (we meaning, like, all humans) were supposed to be in its catastrophic grip back in 2006.
On April 5, 2006, Jeffrey Brown (aka "Westexas") made the following prediction:
"As I said last year, I expect that by the end of 2006 we will be in the teeth of a ferocious net oil export crisis."
Hat Tip to JD
The particulars of its functioning were also dispatched by JD.Now, let us back up a second and discuss this more at the conceptual level, where it might be applicable. Might.
If I understand the basic idea, Jeffrey is really saying nothing more than within a given locale, said locale producing more oil than it consumes, the natural decline rate conceptualized by bell shaped peak oil curves (no need to go into how badly that assumption works out) and increasing local consumption provide opposing forces conspiring to accelerate the decrease in available exports. Until there are no exports, and worse yet, the locale can't meet its own consumption. At which point this causes doom, mad max, collapse, whatever the peak oil nonsense du jour was durring the bad old peak oil days.
Mexico meets the criteria of this general concept which, for the record, was hardly invented by Jeffrey, and is conceptualized quite well with run of the mill supply/demand curves, modeled with exogenous interference (itself operating under the same principle but on a larger scale).
As we now know, peak oil isn't a singular event, it can happen multiple times, so any use of the classic ELM idea has to include this reality. Jeffrey's concept does not. As we also know, changes in demand because of price increases, conservation and substitution, are also applicable within the same locale. Jeffrey's concept does not include any of these concepts either.
So no, ELM is not relevant because it doesn't include all the mechanisms that we know can interfere with it, mechanisms that Jeffrey ignores because...lets be honest...he built it back in the days when economists were being denigrated for not understanding peak oil. Turns out, they knew more than geologists did of what a supply response to price look like. But the general concept of supply and demand within a given local, and exogenous effects, does fit what is happening to Mexico. As to what happens next...well..that is another conversation. But it would not include the ELM.
Tanada wrote:Mexico has been a poorly managed country for decades and as a result it is much more like Venezuela than the USA. Oil profits during the high value years were squandered rather than being invested in future production or replacing aged equipment and as a result they now find themselves in a precarious situation.
And has had 2, perhaps 3, prior peak oils (if memory serves). So might this new one be #3 or #4? Could be. The poor management you mention has a direct link to WHY multiple peak oils can happen, and any country dependent on resource development runs the risk of the resource curse.
For oil exporting countries dependent on those revenues, the world is changing under their feet and they better figure out something quick, or be buried (economically speaking) by the tsunami of new tech that the developed world is applying to solving their liquid fuel consumption problem.
Tanada wrote:Even worse the Permian basin and Eagle Ford basins where the USA is producing large volumes of fracked oil and gas extend across the international border into Mexico making it likely that Mexico could greatly increase production for a decade or longer with a shale boom of their own, but distrust of the government and mismanagement mean little progress has been made in exploiting these resources for the benefit of Mexicans living in Mexico.
Hence..more peak oils possible for Mexico. But I wouldn't worry about the US success spilling over into the Burgos Basin quite yet. There is something very specific going on with international shale development, and it isn't the quality or quantity of resource available, but more the economics of development. As Harold is fond of saying, you gotta have the 3 R's. Rigs, rednecks and royalties. I can figure out how to populate a country with the first 2...but that 3rd one is the trick....