Peak Oil is You
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Page added on May 12, 2015
The Last Barrel Of Oil Will Be Worthless
Why do we no longer burn whale oil? Because alternatives appeared that were cheaper, simpler to procure, and more energy efficient. This is the logic behind why Peak Oil is a false theory, says Diego Parrilla, hedge fund manager and co-author of The Energy World is Flat.
“The idea of Peak Oil is a very linear projection of the world – today I use this, I will continue to use it, I consume x, I will grow at y% – it’s a very static view,” says Diego in these excerpts from his hour interview with Real Vision.
Diego Parrilla combines an engineering background with his lifelong career in the hedge fund industry to shed light on the energy market through the lenses of finance. In this eye-opening interview, Diego speaks to Real Vision on the future “flattening” of energy prices, the supply-demand reconciliation in petro products, and our shared quest of abundant, cheap, and yes, clean energy.
At the logical extreme of Peak Oil theory, says Diego, “you end up at a very armageddeon, Mad Max type of world where, oh my god, I can only drive my car with gasoline, I will have to pay millions for my gas. No you won’t – you will use something else.”
Diego then goes on to explain the Broadband of Energy, a fascinating concept that takes into account the potential writing off of all the existing non-profitable energy assets, allowing the future energy business to sell energy at lower prices, thus permanently flattening the price curve.
“It’s not obvious to me who will win,” laughs Diego, “but it’s quite obvious who will lose.”
12 Comments on "The Last Barrel Of Oil Will Be Worthless"
Perk Earl on Tue, 12th May 2015 4:57 pm
“You give money to engineers and they will come up with solutions. They will find ways to make more with less.”
Corn-Techno-Grandiosity.
J on Tue, 12th May 2015 4:59 pm
Engineers will solve it… Quest for abundant…
WTF is up with the flash messages:
“ARM YOURSELF”
“WAKE UP SMELL THE COFFEE”
Dredd on Tue, 12th May 2015 5:03 pm
One man’s garbage is another man’s treasure.
The last barrel of oil, and billions before it, will be valuable evidence in criminal prosecutions in the future (Oil-Qaeda & MOMCOM Conspire To Commit Depraved-Heart Murder).
Rodster on Tue, 12th May 2015 5:04 pm
“Diego Parrilla combines an engineering background with his lifelong career in the hedge fund industry”
Ah a capitalist at heart. Yup that explains we’ll always find a solution. Just let the market figure it out.
Hey Diego we’ll continue to burn oil until there is no more and we have nothing else to burn. We could have made a transition a long time ago and yet we keep reading and hearing there’s a solution out there just waiting to be discovered.
You underestimate the greed, selfishness, control and power of man. But then again you’re a capitalist so who cares, right?
BC on Tue, 12th May 2015 6:48 pm
Another financial type who does not actually understand Peak Oil, EROI, exergy, net energy cost of energy extraction, financialization of the commodities market, and “money illusion” and its effect of distorting price signals.
Extraction of costlier crude oil substitutes is now uneconomic, but the economic system depends upon the profitable growth of these fuels per capita, including the necessary growth of real GDP per capita to continue to build out “renewables” to necessary scale while simultaneously maintaining the fossil fuel infrastructure indefinitely hereafter.
But real GDP per capita for 70%+ of world GDP peaked in 2005-08. The US has doubled shale output since 2008 only to realize a net ~500Kbd after accounting for the growth of oil consumption as a share of growth of oil production by the energy and energy-related transport sectors.
Given this uneconomic situation for the extraction of the primary resource of the economy, society, and civilization, there is little chance that “renewables” will maintain growth of build out hereafter.
BC on Tue, 12th May 2015 7:06 pm
http://arxiv.org/abs/1503.06832
Energy Investor on Tue, 12th May 2015 7:48 pm
I am glad no-one fished the whales to almost the point of extinction…
What, they did?
So what happened to prices when whales became scarce? Prices were not flat and they alternately spiked up on scarcity and down on availability of substitutes. The spikes in both directions were extreme….so prices were definitely not flat.
Over time, there was substitution from parafin and then from “rock” oil. Then we had little more use for the whales.
But our current predicament is that today we use oil for many essential things. If it were still possible to use whales, we would need around 5 million whales per day, to give up their oil…assuming it had similar utility.
Diego misses the point that it is the high energy density of oil that makes it’s derivatives useful as a portable store of energy.
His engineering buddies have known about our oil reliance since WW2, so where are the solutions?
rockman on Tue, 12th May 2015 9:04 pm
“At the logical extreme of Peak Oil theory, says Diego, “you end up at a very armageddeon, Mad Max type of world where, oh my god, I can only drive my car with gasoline, I will have to pay millions for my gas. No you won’t – you will use something else.” It always amazes when folks rant along these lines. They are so focused upon the world in which they exist they forget that the “future” they are attempting to paint a picture of has already existed for hundreds of millions around the globe. He should travel around some and see societies that have long passed their own personal PO moment…if they every had enough oil resources available to them in the first place.
gdubya on Wed, 13th May 2015 12:24 am
Maybe engineers have insight that chemists don’t; but in this universe fossil liquid hydrocarbons are the best bang for the buck. Free to ‘make’, available in not-quite limitless quantity; cheap to procure, easily stored and transported.
There is a reason why it caught on and hasn’t been superseded – there is no substitute.
Of course any economist can explain that all resources can be substituted, and if we don’t have enough air, water, food or fossil fuel then demand will provide the supply.
Northwest Resident on Wed, 13th May 2015 1:19 am
They’ll keep marching futile techno optimists like this writer into the public eye until the lights flicker out. We don’t know if this writer is intentionally participating in keeping the illusion of “all is well” alive, or if he really believes what he is saying and is unwittingly being used for that purpose. But these days, keeping the illusion alive, drawing as many people into the illusion as possible and keeping them mesmerized with false hope and sweet lies, is vitally important. Someday, there will be vehicles stranded on the roads, out of gas, there will be food riots and mayhem in the streets, but on every television set still working will be a smiling talking head telling us the economy is improving, job numbers are up, the recovery is in full gear and all of our energy needs have been solved.
Hey, has anybody ever seen that movie with Jack Nicholson called “Mars Attacks”. Very funny and relevant political satire, IMO. How about the scene where the Martians are actively attacking, killing everybody they see, knocking down buildings, and the people are running for their lives. And there are these smart-ass Martians running around yelling “Don’t run, we are your friends,” zapping people with their ray-guns as they try to escape. Like I said, relevant political satire.
Lawfish1964 on Wed, 13th May 2015 7:30 am
“Diego then goes on to explain the Broadband of Energy, a fascinating concept that takes into account the potential writing off of all the existing non-profitable energy assets, allowing the future energy business to sell energy at lower prices, thus permanently flattening the price curve.” What??
“It’s not obvious to me who will win,” laughs Diego, “but it’s quite obvious who will lose.” Oh, now I get it. Investors in existing energy companies will get screwed (“written off”), thereby allowing the energy companies to sell this mythical “energy” at a lower price. Makes perfect sense. So the energy companies will win and their owners and creditors will lose. Awesome!
You have to have a little bit of shadenfreude at the thought of this prick starving to death when the SHTF.
shortonoil on Wed, 13th May 2015 9:39 am
Engineers will solve it… Quest for abundant…
This engineer probably won’t; it is likely that he forgot everything that he learned in thermo 101. Energy is a closed system, it can be neither created, nor destroyed. Fiat money is an open system, its supply is theoretically unlimited. Trying to use money to solve the energy question is a half assed backward approach. It is tantamount to putting the cart before the horse – before you even have a horse.
The energy approach gives unequivocal results. For instance, when it requires half of the energy content of a unit of petroleum to produce it, and its products the economy will never again be able to acquire all the energy that is made available from petroleum. In energy terms, Ein > Eout. Attempting to solve this dilemma by issuing more fiat to buy the excess only results in increased inventories of what is not, and can not be bought. This is the present situation of the market, and that is why this graph will hold regardless of what the fiat monetary system does in trying to remedy the problem:
http://www.thehillsgroup.org/depletion2_022.htm
The end result is that producers will continually be shut-in until the oil age is concluded. To the tunnel vision of a hedge fund manager it results in hedges against whale oil. If they really understood the energy situation they would be hedging horses!
http://www.thehillsgroup.org