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Page added on January 19, 2015
Former oil exec: $5-a-gallon gas on the way
John Hofmeister attracted national attention in 2010 when he predicted that average U.S. gasoline prices would soar to $5 a gallon in 2012, thanks to rising crude oil prices. His forecast fell short, as the cost of filling up flirted with $4 in 2012, but never went higher.
Now, with gasoline prices at $2.14, their lowest level since May 2009, the former president of Shell Oil is issuing another warning, telling motorists that their joy ride may end sooner than they think.
“The next round of high prices is likely to start later this year, as crude rebounds to the $80s and $90s, perhaps pushing to the $100 level by late in the year or early next,” Hofmeister told me the other day after a trip to Calgary, where he was promoting natural gas as a transportation fuel.
“The triggering mechanism will be global demand growth relative to how much capital constraint gets baked into future plans for production this year and next. If new production capital is deferred and demand growth continues at 2% or more, we’ll see capacity constraints during 2016, an election year of course, drive prices higher. Whether we reach $4 a gallon or push past, it’s too early to tell.”
Moreover, Hofmeister still sees $5 gas on the horizon.
“Over the next several years, as demand growth approaches 100 million barrels a day and the industry production falls short, yes, I believe later this decade we’ll see $5 a gallon and possible shortages of fuel in some parts of the world,” he said.
Hofmeister paints a gloomier picture of gasoline prices than many analysts, including the U.S. Energy Information Administration, which predicts U.S. gasoline prices will average $2.33 this year and $2.72 in 2016. But he also feels that the perception of a “glut” in world oil production now is overstated, with supply outpacing demand by only 1 million barrels a day or so.
Some of his former peers in the oil sector share his sentiments regarding the oil oversupply, and its impact on oil prices.
“Most of us in the industry are surprised that it’s fallen as hard and fast as it has,” Ryan Lance, CEO of ConocoPhillips, said at a Center for Strategic and International Studies. “I don’t know that I have a real good answer to that question, other than it doesn’t feel like the fundamentals would support that kind of fall.”
Like Hofmeister, Lance said oil prices could rebound faster than anticipated, as they did in 2009, following the Great Recession.
“People were worried about the global economy, and prices went to $30, $40 a barrel, and just a matter of months later, it was back to $100 a barrel,” he said. “And that’s the kind of volatility we’re in, when we see these imbalances that are created, even though they are relatively small in absolute terms.”
Still, Hofmeister sees a solution to end the roller-coaster pattern to oil and gasoline prices: natural gas.
Since retiring from Shell in 2008, he’s been actively promoting natural gas as a transportation fuel, as the head of an organization called Citizens for Affordable Energy.
“I believe that with the right focus and development of the natural gas fuels market, we could begin to reduce global demand for oil from the 100-million-barrels-a-day level around 2020 to lower demand levels by substituting natural gas fuels,” he said. “We could pull it back to 90, 80, even 70 million barrels a day over the next two to three decades, taking enormous pressure off chronic high oil prices.”
In the meantime, though, his advice to motorists regarding gasoline is simple: “Enjoy the price, because it’s going to go back up.”
35 Comments on "Former oil exec: $5-a-gallon gas on the way"
Makati1 on Mon, 19th Jan 2015 7:18 pm
As the Ps imports it’s oil (~400,000 bbls/day) and has no petroleum exports to worry about, the vehicle drivers here are smiling. Gasoline is down to ~$3.60/gal from a high of ~$5.20 a year ago.
Rodster on Mon, 19th Jan 2015 8:35 pm
By the time gas hits $5 p/g we won’t have a global economy to worry about. And if by some miracle the global BAU economy is functioning, that $5 p/g gas will stab it in the heart. 😛
Go Speed Racer. on Mon, 19th Jan 2015 8:43 pm
Why can’t you clowns post today’s Kunstler column? It does not get any more true than that. So true, todays Kunstler column would get even a rich Jesus freak in a 44 foot motor home, drunk on $2 gas, to sober up. I don’t post the articles this site. Everytime I try, it dont go thru. You do it.
DiscoPants on Mon, 19th Jan 2015 9:41 pm
Kunstler seems to cheer for collapse, until he sees Israel getting flushed down the toilet. Then he gets all Mighty Zionist in tone and berates the hordes of Mongols on the kingdoms door steps. He’s got some kind of cognative dissonance going on; world be damned, but oh you assholes leave Israel alone!
Apneaman on Mon, 19th Jan 2015 10:43 pm
Lol disco
Great writing here on Shell’s Artic nightmare.
http://www.nytimes.com/2015/01/04/magazine/the-wreck-of-the-kulluk.html
peakyeast on Mon, 19th Jan 2015 10:44 pm
The global machine is stuttering.
If it was a car I would be worried that it could stop completely at any moment.
Even if keeps on running a lot of parts will shake loose or break eventually.
Perk Earl on Tue, 20th Jan 2015 12:09 am
I read that article, Ap.
“Lowering the basket and more than a hundred feet of line from the helicopter to the pitching deck below was like a mad version of going after a stuffed toy in an arcade claw-machine game.”
Just one harrowing situation in a long line of difficulties. Looks like Arctic exploration represents the ragged edge of what is conceivably possible at a much higher oil price than the current one. I sincerely hope it means very little if any drilling will take place in that region.
Davy on Tue, 20th Jan 2015 5:17 am
PeakY, yea man, I am of the persuasion that it is the car, gas tank, crew, and desert predicament we are in. Folks I am a pictorial person. Many times I will write word salad here that is an attempt to paint you a mind’s eye. I am not good with words or style. I see abstracts in pictures instead of words. Back to our car, gas tank, crew problems, and desert.
Our economy is the car. This is not your grandfather’s Oldsmobile that you could pull in the garage and fix with regular tools and parts. No our BAU rod is a high performance racing car. What is more amazing with this bad ass vehicle is it can’t be turned off to be fixed anymore. The cats that built it have progressed it to the point that it is running near max RPM. It cannot be turned off because for reasons of maximum efficiency and performance. The engine is finely tuned and requires set speed and heat to maximize HP’s. Further it has progressed to the point of being so complex the designers and mechanics are constantly working on. They have to ride the friggen thing while it is running through the desert and repair on the fly.
This is only part of the problem because the fuel this car uses is degrading. This fuel is our oil predicament of depletion. The fuel is of low quality and increasingly not available in quantities and quality needed. These boys are in this rally race in the desert with unreliable supplies. This is a high performance mad max vehicle that cannot be slowed down, mechanical systems pushed to the limits, and fuel quality and quantity dropping.
The driver and his crew are wearing out from excessive efforts to maintain and operate the vehicle in a hostile environment. These folks are in the desert far from food and water depending completely on this monster mad max rally car to get them through the desert. If the car stops these guys starve. The driver is an asshole rich guy that is eating and drinking the food and water supplies while his crew is suffering heat, thirst, and an empty stomach. That situation is our fraying social fabric.
All of this is causing mad max to actually slow down. The constant pushing the limits of man and machine has created systematic issues between different mechanical, maintenance, and operational systems. The engine is now so complex it cannot be shut down, redesigned, and crew rested. These numb nuts left the plan B survival kit at the shop in there hast to win the race. The vital fuel to keep this fiasco running is degraded and not always available. That is a mind’s eye of our situation today. We are all in with no plan B. Our monster mad max rally car is these boy’s coffin cause it ain’t gonna make it to the other side. BAU is our coffin.
rockman on Tue, 20th Jan 2015 7:36 am
Earl – “Lowering the basket and more than a hundred feet of line from the helicopter to the pitching deck…” I’ll take that ride any day compared to transferring from a workboat to a rig via a swing line. Last time I did that it was with 8′ seas. The workboat would back up to the platform (sometimes with its whirling props coming out of the water), bang into the platform bumpers and we would swing ourselves one at a time out over the fan tail and drop. Drop too late and you would fall into the prop. A life preserver wouldn’t do you much good at that point LOL.
Usually not that hairy but didn’t have a choice that time. Other than mistakenly thinking I was dying from a poison gas leak the scaredest I’ve ever been offshore. But chopers are a bit scary also even in calm weather: most offshore GOM oil field deaths happen from chopper crashes and not rig accidents.
dave thompson on Tue, 20th Jan 2015 7:47 am
The price is going back up soon enough. BAU is no where near done.
ghung on Tue, 20th Jan 2015 7:53 am
@DiscoPants – Kunstler has often been critical of Israel and their policies, and calls the situation what it is; impossible.
paulo1 on Tue, 20th Jan 2015 8:05 am
I watched a faller being slung off a 4500 ft mountain underneath a Boeing Vertol 107 on a 100′ long-line. They dropped him (gently) on a rolling pitching dock where I took him to town to get his broken leg fixed. Or, barge loaders lifted onto a pitching empty log barge by hover, while it was underway, on the west coast Vancouver Island. Remote operations mean helicopter transport. Those that can long-line are the best pilots in the world and make dangerous seem like everyday. Hell, one day we slung in a 985 radial engine onto a DCH-2 (Beaver) and the pilot hovered the machine so steady we were able to bolt the engine onto the firewall mounts while the trees swayed and the Liard River swept underneath the floats. It looks terrible and terrifying, but these guys are that good at their job.
viewcrafters on Tue, 20th Jan 2015 8:16 am
Save the natural gas for our grandchildren.
viewcrafters
Davy on Tue, 20th Jan 2015 8:30 am
Some news to start your day out.
Crude & Copper Are Crumbling
WTI Crude prices are back below $48 having tumbled in the last few minutes. Copper prices are also sliding notably (as gold and silver slip). No immediate catalyst aside from delayed reaction from last night’s slow and sure realization by The IMF that all is not well will global growth.
http://www.zerohedge.com/news/2015-01-20/crude-copper-are-crumbling
shortonoil on Tue, 20th Jan 2015 8:40 am
The power company doesn’t give you kWhrs, you have to buy them. A kWhr is an energy unit, just like a BTU is an energy unit; and this stuff isn’t free. One kWhr equals 3,413 BTU. One barrel of oil (on average) provides 282 kWhrs of energy to the end consumer, and that is going down as time progresses. When the consumer buys petroleum products they are buying energy, just like they do when they turn on the light switch. If you don’t have enough money to pay the bill, the power company turns off your power. If you don’t have enough money to buy the petroleum no one will give it to you, and you don’t get any energy.
As the amount of energy to the end consumer from a barrel of oil goes down, the consumer gets less, and less for their money. A point is reached where they don’t have enough money to buy it, and the petroleum industry turns off the power. This is the maximum price that the consumer can pay for petroleum. We show a graph here of what that is:
http://www.thehillsgroup.org/depletion2_022.htm
$5 gas is equivalent to $151/barrel oil. The consumer doesn’t have enough money to buy oil at $151/barrel. The price of gas is not going to $5.00, the economy can’t afford it. The economy doesn’t have the money to pay for $151 oil. This very simple concept that when you talk about petroleum you are talking about energy seems to escape most commentators. It is sort of a lights are on but nobody’s home situation. Perhaps they will start to get the point when he power company shows up to turn off the lights!
http://www.thehillsgroup.org/
ghung on Tue, 20th Jan 2015 9:47 am
Davy – Gold and silver have been creeping up the last couple of weeks (up about 10% since the beginning of the year). Notably, platinum is below gold again; sort of unusual. Copper has been dropping for quite a while; not a sign of ‘return to growth’.
bobinget on Tue, 20th Jan 2015 10:36 am
Pop quiz: How many percentage points did IMF take off previous growth estimates?
By what percentage did China miss it’s predicted
GDP goal?
By what percentage point(s) did India, exceed it’s
GDP expectations?
How many fewer or greater tons of oil did China import Q/4?
Did India import more or less oil Q/4?
How many USD’s did Venezuela borrow from China and for what time period?
Ecuador, same question..
UKRAINE, same question.
Peru, same question.
Get out your google boy and girls.
http://real-agenda.com/2015/01/09/china-takes-hold-in-latin-america/
bobinget on Tue, 20th Jan 2015 10:44 am
http://www.zerohedge.com/news/2013-10-08/hilarious-charts-day-imfs-growth-forecasts-over-time
Here’s another, more academic paper:
http://www.ieo-imf.org/ieo/files/completedevaluations/BP-14-04.pdf
IMF is like the ‘One True Church’ every revision
made is the last and final word.. Until the next revision.
bobinget on Tue, 20th Jan 2015 11:09 am
Pop quiz: How many percentage points did IMF take off previous growth estimates?
((The IMF downgraded projections it issued in October by 0.3 percentage point each, predicting global growth at 3.5 per cent this year and 3.7 per cent in 2016.
But even with those reductions, the world economy will be growing faster than in 2014, when the IMF estimates it expanded 3.3 per cent. Much of the momentum is coming from an accelerating recovery in the U.S.))
By what percentage did China miss it’s predicted
GDP goal?
IMF also trimmed its estimate for China’s growth to 6.8 percent, down 0.3 percentage
By what percentage point(s) did India, exceed it’s
GDP expectations?
Gross domestic product grew 5.3 percent year-on-year following 5.7 percent expansion in the previous three months. Economists had forecast 5 percent growth.
How many fewer or greater tons of oil did China import Q/4?
http://www.eia.gov/countries/cab.cfm?fips=CH
Did India import more or less oil Q/4?
http://www.eia.gov/todayinenergy/detail.cfm?id=17551
How many USD’s did Venezuela borrow from China and for what time period?
http://www.eluniversal.com/economia/140311/debt-with-china-and-russia-totals-usd-61-billion-in-seven-years
Ecuador, same question..
http://www.reuters.com/article/2013/11/26/us-china-ecuador-oil-special-report-idUSBRE9AP0HX20131126
UKRAINE, same question.
Three billion on future grains deliveries.
Ecuador’s state oil company PetroEcuador, was dispatched to China to help secure $2 billion in financing for his government. Negotiations, which included committing to sell millions of barrels of Ecuador’s oil to Chinese state-run firms through 2020, dragged on for days. Calvopiña grew anxious and threatened to leave.
Beijing’s growing thirst for natural resources has led Chinese oil firms to offer at least $100 billion in oil-related financing around the world. They already control growing volumes of oil from Venezuela, where China has negotiated at least $43 billion in loans; from Russia, where the tab may exceed $55 billion; and Brazil, with at least $10 billion. In Angola, the deals total around $13 billion.
Rodster on Tue, 20th Jan 2015 11:13 am
@bob “By what percentage did China miss it’s predicted GDP goal?
IMF also trimmed its estimate for China’s growth to 6.8 percent, down 0.3 percentage”
Based on what i’ve read, China has been fudging their GDP data just like Italy and the US. According to estimates, their real GDP has been in the range between 3-4.5% yoy and not the 7-10% growth yoy.
bobinget on Tue, 20th Jan 2015 11:21 am
Do you still believe gasoline prices in the US can be held under $5. bucks a gallon?
If, faced with the loss of Ecuador and Venezuela you still believe in the shale fairy, lookie cheer.
http://www.energyeastpipeline.com/?gclid=CjwKEAiAlvilBRC5ueCzkpXb4kgSJADxop1Bqtc-pOd3NyVh84Q_bEnoJCvZqx2iY6ttd8i8BDT3vhoCuHDw_wcB
Still unimpressed?
Go periodically, to Google News. Now, guess how long Yemen’s current Saudi puppet government remains in country.
Check casualty numbers for Syria/Iraq 3.0
ISIL progress in Libya, Sudan, Angola, Nigeria.
shortonoil on Tue, 20th Jan 2015 1:35 pm
Do you still believe gasoline prices in the US can be held under $5. bucks a gallon?
I do believe that the consumer can not pay $151 for a barrel of oil that is only worth $76 to them. The price of a barrel of oil can be no more than the value of the economic activity it can power. It is not possible to use $151 worth of oil to produce $76 in goods and services, which is what Hofmeister is proposing.
The fairy tale that oil is going to skyrocket in price to save the petroleum industry is just that: a fairy tale. The value of oil is going down as the amount of energy a unit of it can supply to the general economy goes down. It has been going down for 150 years, and will continue to go down. Depletion has not taken a vacation! The difference this time is that the consumer can no longer afford to pay what is needed to produce it. That was the change that occurred in 2012.
For the last 150 years production costs have been increasing; the value of a unit of oil to the economy has been decreasing. Two years ago the two met at $104/ barrel. From that point forward the highest cost producers will be continually priced out of the market. That is simply the physics of depletion at work, and a combination of Santa Claus, the Easter Bunny, and the Fairy Godmother can’t change it. We are now facing the coming end of the age of oil, and no matter how much it is denied it will arrive on schedule.
http://www.thehillsgroup.org/
Davy on Tue, 20th Jan 2015 1:57 pm
G-man, yea, golds up slightly but not bad if you are just a prepper buying a few 1/10oz eagles. I still recommend for any of you probee preppers some gold. A 1/10oz eagle is $144 last I checked.
Speculawyer on Tue, 20th Jan 2015 2:46 pm
$5/gallon gas is inevitable. The only question is when. A year? 2 years? 5 years? Certainly less than 10 years (IMHO).
Speculawyer on Tue, 20th Jan 2015 2:49 pm
Like Orlov, Kunstler is so wedded to the collapse narrative that he has lost the ability to objectively look at the data. Actually, I’m not sure he ever had that that skill . . . he’s been a novelist and writer, not a scientist or engineer.
gamilon on Tue, 20th Jan 2015 2:56 pm
Short, I don’t understand why you are so certain the world cannot afford $5 gas? As of April 2014, all of Europe + Japan, and HK paid more than this: http://www.statista.com/statistics/221368/gas-prices-around-the-world/. When push comes to shove, people will find a way to afford $5 gas until a viable alternative replaces it. In that case, they will use less $5 gas. As gas becomes more expensive, people will adapt and become more creative about saving it. The same can be said for $8 gas. Yes, it would be inefficient and a poor allocation of resources, but so are many, many other things Americans spend money on. Why would $5 gas be the death blow, but not healthcare or defense spending? America spends absurd amounts on those areas for little return and that could be cut in favor of oil, which at least returns PORTABLE energy. You seem to leave out the portable part in your value analysis. Expensive gas, to me, seems to be the best way to move large pieces of the economy off of it. It will still be needed for agriculture and shipping for the forseeable future, but the technology already exists for personal transport and power generation to move off of it at the right price point. How much more time would that buy us? Those will be substantial investments, but at least they will be real investments that accomplish something and not pissing endless money into “defense” and “healthcare” (both misnomers). Won’t all of that CapEx into alternative energy help drive the economy more than war and pills? It seems to me that such a reallocation of resources is inevitable if gas prices are high enough, long enough. If something cannot go on forever, it won’t, so something will give. You are correct that energy neutral oil won’t come out of the ground, but there is quite a long way between now and then, and quite a lot of price pain to be felt before the wheels come off (or get replaced with something else).
Speculawyer on Tue, 20th Jan 2015 3:36 pm
Europe has been running on $5/gas for decades. Granted, it doesn’t run great but it does run. There’s a lot of fat in our systems that can be cut out. And alternatives are getting better and better.
I don’t like Hoffmeister’s pitch though . . . natural gas. He just wants us to use that because the oil & gas companies now have less oil and lots of natural gas. He’s being a salesman.
Run the natural gas through efficient combined-cycle power plants and use them to charge up EVs. And over time, we can move away from natural gas plants to more & more wind, solar PV, hydropower, geothermal, nuclear, tidal, biomass, and other carbon free sources.
ghung on Tue, 20th Jan 2015 3:47 pm
Spec: “…Kunstler is so wedded to the collapse narrative that he has lost the ability to objectively look at the data….”
Examples? He’s not the only one to look at the data and see collapse is inevitable, even underway. Problem is, most folks are so wedded to the growth narrative and the idea that our society is somehow immune to collapse, they ignore the data.
Tainter, The Club of Rome, Greer, numerous historians, McPherson; I could go on and on; all have looked at the data in different ways, from different sources, different perspectives, and have concluded the same basic thing: Human society cannot persist while remaining on its current course of extraction, growth, and environmental neglect. While the details are hard to know, the math isn’t so tough. Virtually everyone I know who is in denial relies on hope and prayers, and on the fact that it hasn’t happened yet. But, indeed, it has; hundreds of times.
What, pray tell, makes you believe that our current society is exceptional, that it isn’t subject to the same processes and failures that numerous other civilizations have experienced? How are we so special that we can practise unprecedented levels of consumption, unprecedented levels of environmental degradation, employ unprecedentedly destructive weapons, experience unprecedentedly high population growth, create mass extinctions, all-the-while setting a new precedent for societal survival.
Meanwhile, the planet hasn’t gotten any bigger. Please explain in terms that we, the delusion-averse, can grasp, because the data I’m looking at is pretty fucking ugly, and it’s clear that we, humans, aren’t in control of our behavior. We’re just making shit up as we go along.
Davy on Tue, 20th Jan 2015 3:49 pm
Gamill, oil is a foundational commodity. All the other examples you gave rely on oil to function. The issue is macro and systematic. We are talking an economy and currently a global economy that needs immense amounts of energy to manage complexity. We have huge global distribution networks, dispersed just-in-time production, vast AG monocultures, massive urban centers, and huge waste needs. All this along with depleting resources, sputtering financial system, and geo-political turmoil. Oil is behind all these aspects of modern BAU and behind the solving of the problems mentioned.
Systematically all this global complexity must grow and to grow it must have high quality energy. If energy is depleting in quantity and quality then the foundation of global BAU will likewise deteriorate. If there is one thing BAU does not like is to have its complexity deteriorate.
Forget oil prices globally. You must take the price of oil without the taxes or subsidies. Taxes allow for mass transit and other infrastructure to lower oil use requirements. Subsidies allow for social stability. The variance of oil prices is financial, political, and social. It does not vary globally because oil is a global commodity. If a nation prefers to use oil products to influence society that is a different story. That does not change the foundational element of oil underlying all activity with a systematic macro effect of energy induced complexity.
I feel personally we may see an oil spike but this is going to be a jerk up in a trend down. We are in or near the bumpy descent now. Demand destruction and supply destruction are in a symbiotic negative relationship reinforcing each other in a downward vicious cycle. The financial system that relies on confidence and liquidity is likewise in a debt spiral. It is the combination of these two foundational elements of global BAU that cannot be unhealthy and still grow BAU. BAU must grow to maintain complexity and fight entropy.
The death rattle of the end days of BAU is appearing nearer with what we are seeing in the oil sector and the financial system. Time frame is a debatable question but growth ends in a finite world especially global growth. There are no new hemispheres to populate. A long story short is oil’s economic value is doomed because of entropy and entropy is a undeniable law of nature.
shortonoil on Tue, 20th Jan 2015 4:43 pm
Short, I don’t understand why you are so certain the world cannot afford $5 gas? As of April 2014, all of Europe + Japan, and HK paid more than this:
In the US (since way, way back) 68% to 72% of the cost of gasoline is the price of the crude. $5 gas in the US translates to $151/barrel oil. The world can never pay $151 for a barrel of oil. It doesn’t contain enough energy to pay for itself at that price level. The examples of other countries result from a tax on fuels. That money goes back to the populace in health care, and other social programs. Those societies pay $5+ for gasoline, and are handed back some (most) of it in other ways. That method has been very efficient at restraining consumption, which is why most of Europe on a percapita bases uses half the oil that the US does. The US has only been able to afford its oil bill up to now because the US dollar has been the world’s petro-currency.
A long story short is oil’s economic value is doomed because of entropy and entropy is a undeniable law of nature.
The Etp model (which is an equation) is the solution of the Entropy Rate Balance Equation for Control Volumes for petroleum production. That Rate Equation is a Seond Law Statement because it is derived directly from the Second Law. The Etp model equation is also a Second Law Statement because it is derived directly from the Entropy Rate Balance Equation for Control Volumes.
Because there is no direct solution to the Etp equation (it is non deterministic) its output was developed through numerical analysis. It took thousands of hours of computer time to come up with the values we publish.
http://www.thehillsgroup.org/
gamilon on Tue, 20th Jan 2015 5:21 pm
Thanks for the responses, Short and Davy. I’m a long time reader, first time poster. I’m going to chew on what you’ve said and I look forward to more discussion in the future.
I don’t disagree with the substance of what you are saying, I don’t refute entropy, and I don’t think a fossil fuel powered economy can go on BAU as entropy renders those fuels harder to obtain.
I’m here to try to come to terms with the timing of it all. It is a big difference as to whether the fossil fuel economy collapses in the next year or in 80 years. I believe there will be other crashes related to business cycles, monetary policy, and asset bubbles between now and when the real crash starts, and I think it will be hard to tell them apart. I have some other questions, but I’ll keep reading, learning, and post more later.
Thanks to all the posters and administrators on this site for your debate and viewpoints – it has been informative reading.
Davy on Tue, 20th Jan 2015 6:17 pm
Gamill, you are so right on the issue of timing. If the PO crowd has failed it has been with too much reaching with forecasts and predictions. Yet, these conditions of having a foundation resource entering economic depletion coupled with an unstable global financial system risking liquidity are profound in their implications. The systematic macro nature of a bifurcation of the vital elements of BAU namely extraction, production, distribution, and management has been very real since roughly 2005. For ten years now we have been living precariously near a cliff dancing and singing when a possible fall is so close.
Life in multidimensional with ascending layers of abstraction. Some parts of life are beyond science and human computation. Some ideas are beyond abstraction because they are at levels of interconnectedness that have no measure. These comprehension issues along with time value greatly impact the substance of our PO and BAU descent message. Can we even begin to make a map of our journey ahead? Time frame difficulties dove tail with measurement difficulties to further complicate clarity.
I do think we can place a meaningful time frame on EPT oil depletion. Other carrying capacity issues and economic issues are not so easy to map. Yet, we can acknowledge there is physical disequilibrium, confidence issues, and systematic instability but measurements are difficult. How do you measure irrational human nature?
Time frame has a human element. I like to point to 3-5-10 year range. The 3 year is imminent. The 5 year has a greater comfort level. 10 year does not cause much anxiety in me. Humans place higher value on the nearness of events as we do on the time value of a physical like money. If BAU has 10 more years and we are crying wolf after 10 years of crying wolf that lacks human value. This is true even though 10–20 years is nothing by most historical measure.
In the context of mitigation and adaptation the time frames have much more significance. We have little we can do in 3-5 years. Our best chance of an effective plan B is maybe 10-15 years. In conclusion these issues are far more complex than we care to admit and the time frames suffer human value prejudices. The Plan B time frame appears to be slipping from our grasp this fact is hard to deny.
Apneaman on Tue, 20th Jan 2015 6:27 pm
Canadian drilling services compay files bankruptcy
http://www.mysanantonio.com/business/eagle-ford-energy/article/Canadian-drilling-services-firm-files-bankruptcy-6025822.php
GregT on Tue, 20th Jan 2015 7:49 pm
Welcome gamilon,
You said:
“I’m here to try to come to terms with the timing of it all.”
That’s the 7 billion dollar question, isn’t it? It is not a matter of if, but a matter of when.
“It is a big difference as to whether the fossil fuel economy collapses in the next year or in 80 years.”
There aren’t enough reserves on the planet to keep us going for another 80 years. If we ramped up production and burned every last drop, maybe 40. The bigger issue here is not what will happen when our fossil fuelled economies collapse, it is what will happen if they don’t. The consequences of our actions will take time to play out. It is the lives of our children that are on the line here, more so than ours. IMHO we are going to see a drastic reduction in our populations inside of 30 years. the longer we continue to burn fossil fuels, the bigger the die-off is going to be.
In my view, the real crash has already begun. It started 30 years ago and has been gathering momentum ever since. We just can’t figure it out, just like the frog in the pot of boiling water.
shortonoil on Wed, 21st Jan 2015 9:54 am
It is a big difference as to whether the fossil fuel economy collapses in the next year or in 80 years.
To answer any question it is necessary to make assumptions. The more assumptions one is forced to make the less likely the conclusion will be accurate. The Etp model (which is an equation of state) allow us to disperse with some of the assumptions that we would otherwise have to make. For instance: it tells us that the “average barrel” of oil will lose all of its value sometime between 2030 and 2035. We can be sure that this will happen with a 4.5% margin of error.
Of course that does not completely answer your question; will the present system that requires petroleum to be sustained last 1 or 80 years? The model does, however, gives us boundaries to work with, that is, the present system, in all likely hood, will not last longer than 2032.5 (half way between 2030 to 2035). We can eliminate, with a very high probability of success, that the present system will last 80 years.
There are many other factors that will affect the longevity of the present system that are not answered by the Etp equation of state. The model does tell us that the overall economy is now in a perpetual state of contraction. It doesn’t tell how long our monetary financial system can exist in that state. It does tell us that petroleum depletion is now reducing the stability of the world’s oil producers. It does not tell us how long that can continue before geopolitical forces tears the system apart.
To get an estimate for those questions requires that one makes assumptions, and balances the cost of risk against the probability of occurrence. That will be very much influenced by individual philosophy, and attitude. But a good time worn test is that most projects are likely to have cost overruns, and not come in on schedule. It is best to incorporate a large margin of error, with amble redundancy.
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