[ROCKMAN]

Here’s what I take from the various charts. The world less USA (WLUSA...and thanks for that Revi) chart seems to indicate a global plateau starting in 2005. Brent was trading around $58/bbl at that time...almost double from just a few years earlier. US production was not increasing then but rather still at a slight decline to flat. Then oil prices collapsed in early 2009 and the WLUSA curve is still plateaued. And then oil bounces back to $100+/bbl from 2011 to 2014 and the WLUSA curve is still plateaued. USA production starts booming during that period but how would that suppress global oil development as long as prices are still almost double what they were in 2005? IMHO that should add some doubt that USA oil production increases had anything to do with a lack of UK (or anyone else's) oil development as long as prices stayed high.

Of course now lower oil prices are going to suppress all global activity in addition to USA activity. But the WLUSA chart seems to clearly indicate that the world could not respond with increased production even when prices were at record levels. That might be the best indication that the world had reached, or at least was approaching, PO. But we still have to allow that big international projects take many years to come to fruition.

So what about the new record breaking global oil production rate with lower oil prices? It seems rather intuitive that the current global production isn’t from newly developed resources but rather increased production from already proven and developed fields. IOW the KSA didn’t increase its production by solely developing new reserves but just increased production from its existing wells. If anything the record global oil production doesn't argue against global PO but more likely indicates we’ve just gotten shoved closer to GPO especially when you take into account the loss of incentive to develop new reserves as a result of the oil price collapse.

[Revi]

Saudi Arabia has a lot of oil, but are they a swing producer any more? In other words, can they increase their production and flood the market any more? They have a high water cut in their biggest fields, and have for years, so maybe they are over the peak also, in which case we are all over the peak, as said by Matt Simmons in End of Suburbia.

I got that chart from Peak Oil Barrel, so the credit goes to Ron Patterson who predicted that we would hit peak oil in the US and globally in April or May of 2015. It may have happened,but we won't know for a while.

[ROCKMAN]

pstarr - With the possible exception of a small ramp down due to the US shales slowdown I never see the world "falling" or "stumbling" off the plateau. Just a more or less continuous relatively slow decline. Most of the fields supplying the world are rather old and have reached a relatively low decline rate phase. The exception would be Deep Water GOM fields but they actually only represent a few % of global oil production.

[dolanbaker]

When you factor in the sheer amount of fuel that can be saved simply by making minor changes to how things are done, a 10-20% drop in supply can easily be absorbed with little affect on normal day to day living.
But it will cause a recession.

[davep]

what minor changes?

IIRC, the French were pretty elastic in their car usage when prices spiked in 2008. Consumption went down by about 25%, I think.

For me, the problem is that the economic system will be torn to shreds before any major decrease in oil production. Some will then blame the economic crisis for the lack of oil demand

[sjn]

what minor changes?

IIRC, the French were pretty elastic in their car usage when prices spiked in 2008. Consumption went down by about 25%, I think.

For me, the problem is that the economic system will be torn to shreds before any major decrease in oil production. Some will then blame the economic crisis for the lack of oil demand

A lot of people lost their jobs: consumption went down. Supply and demand are not separate variables; but highly dependent. There needs to be a certain level of demand to enable prices high enough to make marginal production profitable. Yet only as much oil as has been discovered can be developed in the medium term, and can be brought on line in the short term, no matter the price.

Of course, demand requires people to have jobs performing economically productive activities [pie making], this becomes difficult when oil prices are too high [too large slice of the pie] causing recession, or when oil producers are unable to operate at a profit due to low prices and default on their debts, pulling capital from secondary to economic activities and contracting the economy further depressing demand [shrinking pie]. Of course it's not just oil.

The only way to have a mostly stable growing economy [pie] with a growing population and rising standard of living is to have a growing commodified resource base, with demand moderated by commodity prices. Too high prices triggers recession, and spurs greater production which moderates prices, this is what we've experienced for the last 100+ years.

"The Undulating Plateau" has seen marginal production costs constantly rising which has manifested in price volatility since it begun 2004/5: we've seen recession triggered from too high prices; depression from too low prices. There's no equilibrium, but a shrinking channel between prices too high and too low. We'll fall off when they meet. [No more pie]

I suspect most here will now agree with the above.

[davep]

My point was just that we don't need a "mostly stable growing economy", as the growth requirement is unnecessary and merely a function of our current monetary system.

[sjn]

My point was just that we don't need a "mostly stable growing economy", as the growth requirement is unnecessary and merely a function of our current monetary system.

Then where does the capital come from to "invest" in new production of ever higher cost commodities?

There either needs to be excess capital produced from economic activity, or (exponential) monetary expansion, as you just indirectly alluded to. How sustainable are either options?

The only alternative outside our "current monetary system" is to replace it with a non-market vertically integrated or demand system, where resources are produced for specific applications as needed. Of course that's more than just a different monetary system!

[davep]

My point was just that we don't need a "mostly stable growing economy", as the growth requirement is unnecessary and merely a function of our current monetary system.

Then where does the capital come from to "invest" in new production of ever higher cost commodities?

There either needs to be excess capital produced from economic activity, or (exponential) monetary expansion, as you just indirectly alluded to. How sustainable are either options?

The only alternative outside our "current monetary system" is to replace it with a non-market vertically integrated or demand system, where resources are produced for specific applications as needed. Of course that's more than just a different monetary system!

I've posted alternatives here http://peakoil.com/forums/the-death-of-money-the-coming-collapse-of-the-international-t71722.html#p1263586. The proposed solution involves treating money as equity rather than debt, so it stays in the economy rather than disappearing when loans are paid off. This by definition ensures there is capital in the system without needing the current ponzi system.

[sjn]

My point was just that we don't need a "mostly stable growing economy", as the growth requirement is unnecessary and merely a function of our current monetary system.

Then where does the capital come from to "invest" in new production of ever higher cost commodities?

There either needs to be excess capital produced from economic activity, or (exponential) monetary expansion, as you just indirectly alluded to. How sustainable are either options?

The only alternative outside our "current monetary system" is to replace it with a non-market vertically integrated or demand system, where resources are produced for specific applications as needed. Of course that's more than just a different monetary system!

I've posted alternatives here http://peakoil.com/forums/the-death-of-money-the-coming-collapse-of-the-international-t71722.html#p1263586. The proposed solution involves treating money as equity rather than debt, so it stays in the economy rather than disappearing when loans are paid off. This by definition ensures there is capital in the system without needing the current ponzi system.

I missed that thread, I'll take a look. I put quotes around "current monetary system" though because I don't think it really matters what the monetary system is to the extent that activities either pay for themselves [economic] or they don't [non-economic]. If costs aren't covered internally, then an external source of capital is needed, whether that is subsidy or direct funding, or equity [ownership? - will read thread ] doesn't really matter. In order for the capital to be available for the non-economic activity, there has to be an excess of capital (debt or equity) over what the secondary and tertiary activities require to function. Am I missing something?

[davep]

I don't think you're missing anything. All equity/sovereign money models have the state creating extra money each year (a small percentage based on a formula generally, to avoid political shenanigans). Some people don't like this, equating it with "Big Government", but the point of equity money is that this is a tiny amount of available equity. Take a look at the IMF paper "The Chicago Plan Revisited" that I link to, which outlines several major issues with the current system that are effectively non-issues in an equity-based system.

[Revi]

I think that "capital" represented extra energy we had from fossil fuels. When that goes we will have to figure something else out. Back to a silver and gold based money system? It could work, and it did for thousands of years. Maybe go back to real fractional reserve banking where they only lent out 10x the amount of silver and gold they had in their vaults.

It would be a change, but it might work at a local level, then at a state level.

[ROCKMAN]

pstarr – “Sure Rock, if you consider -5.6 mbpd year-on-year as slow decline.” Yes: that would be a relatively slow decline of about 6%. Relatively low compared to a 40% to 60% decline from the initial production level of a shale well. OTOH where does a f*cking 5.6 mmbpd decline come from since we’ve seen a global production increase recently? LOL. But stick with that 5.6 mmbopd guesstimate decline and that still looks like a rather slow ramp downwards and nothing close to a “cliff”. Drawn the line and post it if you like.

[davep]

I think that "capital" represented extra energy we had from fossil fuels. When that goes we will have to figure something else out. Back to a silver and gold based money system? It could work, and it did for thousands of years. Maybe go back to real fractional reserve banking where they only lent out 10x the amount of silver and gold they had in their vaults.

It would be a change, but it might work at a local level, then at a state level.

We're straying well off-topic here, but both fractional reserve and precious metal-based currencies are easily manipulated by the banks or those who control the supply of precious metals respectively.

[JV153]

(exponential) monetary expansion, as you just indirectly alluded to. How sustainable are either options?

None of it is sustainable. The Keynesian monetarists don't care about sustainability and never have and really neither does anyone else - on any level, not really.

Right now we have a lot of lower EROEI oil like offshore Angola , USA, Mexico and North Sea and the UAE (https://www.adipec.com/visit/media/offs ... ls-adipec/). Offshore accounts for 28 percent of global (http://www.ogj.com/content/dam/etc/medi ... 00.480.gif) Offshore will decline fairly rapidly so along with decline from light tight onshore US this looks like it's pretty soon.

[dolanbaker]

I think that "capital" represented extra energy we had from fossil fuels. When that goes we will have to figure something else out. Back to a silver and gold based money system? It could work, and it did for thousands of years. Maybe go back to real fractional reserve banking where they only lent out 10x the amount of silver and gold they had in their vaults.

It would be a change, but it might work at a local level, then at a state level.

We're straying well off-topic here, but both fractional reserve and precious metal-based currencies are easily manipulated by the banks or those who control the supply of precious metals respectively.

If your currency was backed by energy instead of precious metal, then the system would be forced to follow the available energy with regards to growth.

[Tanada]

I think we will fall off very soon, the question arises, what will the consequences be that are first noticed?

[dolanbaker]

I think we will fall off very soon, the question arises, what will the consequences be that are first noticed?

Probably a slowly rising price for oil which is not followed by an increase in supply. Then there will be a "recession" caused by lack of overall growth, any growth that happens will be at the expense of something else going into decline.

A rerun of 2008 in fact.

[ROCKMAN]

pstarr/donlan - You're both hitting it right on...and preaching to my choir. LOL. It's not the rate oil production or the increase/decreases we see along the plateau that are critical per se. It's the effects on all the dynamics that make up our entire economic system. Why I keep jumping on folks from time to time when they try to capture our reality by solely looking at just 1 or 2 factors. Yes: the POD is all inclusive...just like life. LOL.

[StarvingLion]

pstarr/donlan - You're both hitting it right on...and preaching to my choir. LOL. It's not the rate oil production or the increase/decreases we see along the plateau that are critical per se. It's the effects on all the dynamics that make up our entire economic system. Why I keep jumping on folks from time to time when they try to capture our reality by solely looking at just 1 or 2 factors. Yes: the POD is all inclusive...just like life. LOL.

There you go...the definition of peak oil reduced to the murky bs of "effects on all the dynamics that make up our economic system".

Peak Oil could be in 2085. I see far more cars on the road everywhere in 2015 than any other time. And I don't see any signs of desperation for alternatives. They are pursuing long term idealism (solar + energy storage).

Try this at the supermarket with the few cashiers left: "Hey baby, you are doomed to a quick death because of Peak Oil. I've got a few hundred thousand bucks and a luxury home in the mountains. Lets run off together and watch the collapse and laugh at the fools!"....and she'll gaze at you like you are a bleeping psycho. And she is right.