Lately there has been some suggestion that “Peak Oil is dead” — that because of the recent drop in demand and price for oil, we will never again see high oil prices and will never run out of oil.
What this conclusion misunderstands is that it’s not about running out of oil, it’s about running out of oil that our economy can afford to extract. If oil cost a million dollars a barrel to extract, we would never have mined most of it, the industrial revolution would have stalled a century ago, and human societies would quickly have reverted to a subsistence local agrarian existence with a much smaller human population and much, much less industry and technology.
Oil was a remarkable discovery. Each barrel replaces the equivalent of about 6 person-years of unassisted manual labour. Our industrial economy and global civilization have been built on the ability to employ cheap oil to do the work of billions of people for next to nothing. We continue to depend on that. Our GDP growth correlates precisely with the consumption of oil, and has essentially nothing to do with innovation, technological ingenuity, economies of scale or ‘doing more with less’. When we run out of affordable oil, the game is up.
What is ‘affordable’ depends a lot on the health of the economy and on the incremental cost of extracting each harder-to-get barrel of oil. For most of the last half century, what was affordable was somewhere between $30-60/barrel. When oil prices have soared to the $100/barrel level, the economy has almost immediately started to tank.
The chart above shows the supply/demand curves for oil, in general terms, over that 50 year time and, most likely, the 50 years to come. It’s a bit oversimplified because supply and demand is also affected by stocks in storage, but the amount of oil that can be reasonably stockpiled to cushion again price shocks is pretty small — certainly not years’ worth.
‘Business as usual’ over the last 50 years is shown by the supply/demand curves labeled S0 and D0, intersecting at around $60/barrel. This is a price that historically has been high enough to allow continued exploration but is low enough that consumers and industry can afford it and still make a profit (and not go into unrepayable debt). When OPEC (or political events) have conspired to constrain supply, the supply curve has shifted over to the S2 curve, and demand has necessarily been reduced to the D2 curve, leading to a $100/barrel price (where S2 and D2 intersect). This has proven to be an unsustainable price, and political pressures (i.e. wars, and threats to OPEC partners) have always been applied when the price has reached this level to get suppliers to pump more oil and move the curves back to the S0/D0 $60/barrel level.
But it’s a difficult balancing act. As cheap (inexpensive to extract) OPEC oil rapidly diminishes, and as the remaining oil becomes more expensive to extract (e.g. tar sands, fracking), the point is reached where $60/barrel is no longer enough to warrant continued exploration. And, as we saw in 2008, whenever our teetering, debt-laden (and cheap oil dependent) economy falters, and demand falls even slightly, the price can plummet to the point where even more traditional exploration and extraction become uneconomic. At this price the economies of many OPEC countries also start to unravel, many of which are politically unstable to begin with.
So let’s look what happened over the past year, when the price plummeted to the $30 level. Here are (again somewhat simplified) the factors that led to this:
- The US, seeking to stimulate an economic recovery after the 2008 debacle, and seeking to punish Russia for its global political and economic muscle-flexing, conspired with the Saudis to increase the short-term supply of oil (we may never know what the Saudis got in return for this devil’s bargain). First world nations also increased their already-massive subsidies to the oil industry to encourage fracking. The combination of these two factors shifted the short-term supply curve to the right (increased short-term supply) from S0 to S1.
- At the same time, much of the first world was mired in an ongoing recession that gutted the middle class and reduced available spending. Already at their limits in debt, consumers were forced to reduce consumption. Even as price started to drop as a result, they have chosen to pocket the savings at the gas pump to pay off debts or for other needed spending (the real, double-digit inflationary cost increases in health care, healthy food, good education and other essentials, for example). To add to this demand contraction, the artificially-stimulated Chinese economy ran out of steam and has started a long and painful collapse. The combination of these factors shifted the short-term demand curve to the left (reduced short-term demand) from D0 to D1. The intersection of S1 and D1 is the recent, depression-level price of $30/barrel.
This was a ‘success’ in terms of devastating the oil-dependent Russian economy (which requires much more than $30/barrel to be a viable producer due to their extraction costs, which are much higher than the Saudis’). It also devastated the less-oil-dependent Canadian economy and Canadian currency (which fell from above-par to 69 cents to the US dollar as a result). It quickly destroyed the fracking industry and has seized up almost all of the projects to produce more expensive oil (the Tar Sands, deep sea, Arctic etc.). So now there’s a huge short-term surplus of supply (there is no place to put any additional surplus), but the longer-term supply (which requires a price of at least $60/barrel steadily increasing to $100/barrel and beyond to develop economically) looks to be collapsing.
On top of this, the disastrous economic policies of the last 50 years, trying to squeeze out a few more years of ‘growth’ in the industrial economy by artificially lowering interest rates to approximately zero, to get consumers to buy even more by going even deeper into debt, have reached the end of the line. They have not and do not appear capable of working any more. We have reached the point at which the ‘real’ cost of oil, needed to power GDP ‘growth’ and enable the globalized industrial economy to continue, is now higher than the exhausted, debt-ridden, artificially stimulated global economy can afford to pay.
What this will mean is that in future, in a whipsaw fashion, we are going to see a combination of spikes and collapses in oil price, in a cycle that will end in both global economic collapse and the end of large-scale oil production and hence our oil-fuelled industrial culture.
First, we will see some brief and unsustainable resurgences in price, from the current S1/D1 curve price of $30/barrel back up to the stratospheric levels of the S2/D2 curve price of $100/barrel and beyond. This will happen as the global supply of cheap-to-produce ($30/barrel and then $60/barrel) oil evaporates. There is not much of this left to begin with, and we can’t create more of it by subsidizing oil production even more than we already do, because our economy essentially runs on cheap oil — without it there’s no money to subsidize anything.
While brief periods of $100/barrel oil will temporarily spark new exploration and development, this price is, as we have repeatedly seen, unsustainable. With $100/barrel oil, demand will inevitably and drastically shrink, even at a horrific human cost — we simply cannot afford to pay for it. So as the longer-term supply of (especially cheaper) oil shifts left (i.e. decreases) as cheap OPEC supplies are exhaused, moving supply to the S3 curve, demand will also shift left (i.e. decrease) as consumers and entire economies, unable to pay for the more expensive remaining oil, collapse, moving to the D3 curve. The intersection of the S3/D3 curves is, again, the depression-level $30/barrel price. But notice how far to the left this intersection has shifted on the chart! The recent shenanigans and economic stumbles have not drastically decreased global oil consumption (the point on the horizontal axis below the S1/D1 curves at intersection 1, relative to the point on the horizontal axis below the S0/D0 curves at intersection 0). However, the future economic and cheap-oil-supply crashes will catastrophically decrease consumption (to the point on the horizontal axis below the S3/D3 curves at intersection 3).
Intersection 3 is the end game for the global industrial growth economy and the globalized civilization that depends on it. It is not the passing of Peak Oil as Hubbert might have envisioned it, since there will be lots of (expensive to extract) oil left in the ground (good news for climate change, though almost certainly too little too late to stave off the end of our planet’s long stretch of stable climate).
What intersection 3 represents is the passing of Peak Affordable Oil. As this complex interplay of economic factors works its way through in the coming decades, we’re going to see some whipsawing in oil prices (and prices and levels of just about everything else) between hyper-inflationary, and deflationary, Long Depression levels. This will be the hallmark of the Slow Collapse of industrial civilization. Get ready for a rough and uneven ride.
makati1 on Mon, 21st Mar 2016 7:10 am
Well, finally! The real peak is exposed just as some of us have been claiming for some time now. It takes a consumer that is able to afford oily products at a price above the cost of recovery, refining and distribution, to keep the oil industry in business and the economy humming. With our current sick economy, that is not going to happen for much longer.
I like how it claims there are decades to come where BAU is going to endure and survive. Slow collapse? Dream on.
LMAO
onlooker on Mon, 21st Mar 2016 7:24 am
And I remind those who frame the oil situation as a glut are missing the main interrelated point that $147 dollar oil crashed the economy because that simply was unaffordable to consumers and ever since prices have been going down more and yet that has hardly improved any economic factors. So you can have all the glut in the world but what does it matter if the economy is unable to be resuscitated.
Truth Has A Liberal Bias on Mon, 21st Mar 2016 7:38 am
There has been no ‘drop in demand’ for oil. Whoever wrote this article is retarded.
onlooker on Mon, 21st Mar 2016 7:43 am
No not a drop in demand but a drop in the price which is hurting the entire oil industry. So one way or the other the economy is suffering.
Davy on Mon, 21st Mar 2016 7:45 am
There has been a drop in the rate of growth of demand and that is what matters. It is tards who fail to understand this. Some tards don’t want to understand this because their investments in the status quo is so important to their tard lifestyle.
marmico on Mon, 21st Mar 2016 8:39 am
Going forward in the short term, the demand curve will outwardly shift from D1 to D0 and the supply curve will inwardly shift from S1 to S0. Voila. Price increase.
There is no sign of a material decline in OPEC oil production so there is 30+ mb/d at less than $30/b.
penury on Mon, 21st Mar 2016 9:45 am
Peak oil? or Peak demand? how about “peak money”? In a world of 8 billion humans there is a lot of demand which cannot be filled due to cost. So lets get real, what we have here is the apogee of population coinciding with the perigee of affordable resources. In other words too damn many humans.
GregT on Mon, 21st Mar 2016 10:13 am
“The greatest shortcoming of the human race is our inability to understand the exponential function.”
Albert Bartlett -who opposed the cornucopian school of thought, and referred to it as “The New Flat Earth Society”
marmico on Mon, 21st Mar 2016 10:16 am
Ya,right.
The first quarter of 2016 will be one of the lowest quarters, if not the lowest quarter, of household spending on gasoline relative to cash wages, disposable income or total spending in the data set (since Wally passed along the sticky encrusted Playboy magazine to Beaver with his flashlight beaming bright under the covers)!
https://research.stlouisfed.org/fred2/graph/?g=3QNb
The doomer porn affordability narrative is bunk.
GregT on Mon, 21st Mar 2016 10:26 am
“The first quarter of 2016 will be one of the lowest quarters, if not the lowest quarter, of household spending on gasoline relative to cash wages, disposable income or total spending in the data set”
Woo-hoo! Happy days are here again! Now marmi, if you could only find a way to get the message out, perhaps Joe sixpack would begin to consume his way back to economic prosperity. Maybe you
could persuade Fox news to give you an interview?
marmico on Mon, 21st Mar 2016 10:33 am
Bartlett was a real genius. LMAO.
Tiny brain GreggieTee has not discovered that neither population nor oil (energy) consumption growth have followed an exponential since Bartlett’s 1969 “classic”. The growth rates have declined.
Dubya on Mon, 21st Mar 2016 10:40 am
Marmico, another relevant date point: the fast food restaurants in Whistler want to bring in temporary foreign workers, apparently the lazy local kids say they can’t afford to live between Squamish and Pemberton on minimum wage.
So that proves it.
marmico on Mon, 21st Mar 2016 10:59 am
Ya, I just read that the El Nino has reduced farm gate almond prices in California.
http://www.motherjones.com/tom-philpott/2016/01/almond-boom-prices-falling-drought-exports
Sorry Dubya, I don’t understand your non sequitur.
markisha on Mon, 21st Mar 2016 11:05 am
USA trying to destroy Russia and Iran and Venezuela economy. Those nation must try to destroy the dollar. who will be faster WIN
Boat on Mon, 21st Mar 2016 11:08 am
The savings from cheaper fuels including nat gas are why I do not fear any global recession. Growth from these savings takes time to develop. While producing countries are hurting, high volume importers will benefit.
Boat on Mon, 21st Mar 2016 11:14 am
marmico on Mon, 21st Mar 2016 10:16 am
“The first quarter of 2016 will be one of the lowest quarters of household spending on gasoline relative to cash wages, disposable income or total spending”.
The doomer porn affordability narrative is bunk.
Another great chart a doomer will deny.
Apneaman on Mon, 21st Mar 2016 12:51 pm
Retard marmi and retard boat are typical of today’s fantasies, pretending things are normal when they are not. ZIRP (7 years) and NIRP are not normal. Economies that can’t function without that and a bunch of other manipulation are a fake fucking joke and no amount of comparing and contrasting of one single metric (cherry picking) is going to change that, but that won’t stop their fragile little psyches from coming up with more while completely ignoring the fact of unpayable debt at every level, increased poverty, failing infrastructure and millions of minimum wage workers who need payday loans so they can afford to go to the dollar store and buy supper (Ramen, mac&cheese)
marmi & boat the sub-prime apologists.
Guess what losers? It will never ever get back to anything like it used to be. The rest of your miserable lives will be filled with days of ever more retarded and desperate excuse making for a failed system. I have been watching you two do this very thing since I first came here. You had way more company when I first got here, but you two are almost all that is left of the corny cheer leading squad. The truest of the true believers. The others could still feel some semblance of shame and embarrassment at getting their ass kicked by the obviousness of their failed arguments. You two are “special”
eugene on Mon, 21st Mar 2016 12:53 pm
I wonder why so many people find an opinion more negative than theirs offensive?
marmico on Mon, 21st Mar 2016 12:58 pm
Data or bull shit, ape.
You are the loser with your miserable life, waiting for momma to croak so you can inherit a million dollar crack shack in Vancouver.
Why aren’t you in Africa sliding condoms on dicks and inserting IUds in vaginas?
I know. You are “special”.
Apneaman on Mon, 21st Mar 2016 1:23 pm
Marmi tard, Like I said you and boat are the only ones stupid and shameless enough to still argue and no sane person needs to see anymore data to know our system is failing badly, but since you want data, here’s some data that confirms my prediction from last year that El Nino will be a minor reprieve at best. Look at the graph comparing this year to other El Nino’s – sad sad sad. Get your cheap almonds while there is still some water in Cali to grow them.
https://twitter.com/ZLabe/status/711589684166590465
Told ya it’s a permanent drought/new normal… retard.
Boat on Mon, 21st Mar 2016 1:23 pm
ape,
” completely ignoring the fact of unpayable debt at every level, increased poverty, failing infrastructure and millions of minimum wage workers who need payday loans so they can afford to go to the dollar store and buy supper (Ramen, mac&cheese”)
Each point you made is a separate discussion. Then needs to be framed in historical context. All discussions are subject to fact checking. You doomers are heavy on opinion and fact light. Lol
Apneaman on Mon, 21st Mar 2016 1:31 pm
Marmi – more data that does not bode well for what’s left of the economy. Not long now until the consequence destroy it completely. Can’t have an economy without infrastructure and hundreds of million of wandering climate refugees. It’s gonna break the bank of every country and soon. AGW is non linear and in the midts of a leap into a new and very unfriendly (for apes) climate system.
Current record-shattering temperatures are shocking even to climate scientists
February 2016 was likely the hottest month in thousands of years, as we approach the 2°C danger limit.
http://www.theguardian.com/environment/climate-consensus-97-per-cent/2016/mar/21/current-record-shattering-temperatures-are-shocking-to-even-climate-scientists
Alpha9 on Mon, 21st Mar 2016 1:32 pm
Waiting for the 2017 Leaf, so those oil problems will be over for me.
See ya suckers!
http://cleantechnica.com/2015/10/30/nissan-spills-details-60-kwh-leaf-advanced-technology-center/
Boat on Mon, 21st Mar 2016 1:42 pm
Alpha,
Nice car. Now that I am getting older my driving miles have dropped. Will I buy a zero energy house or die first.
onlooker on Mon, 21st Mar 2016 1:45 pm
Since Boat likes to talk about how fast collapse is coming how bout this.
PETM Shocker: When CO2 Levels Doubled 55 Million Years Ago, Earth May Have Warmed 9°F In 13 Years. Slow enough for you Boat.
http://thinkprogress.org/climate/2013/10/08/2750191/petm-co2-levels-doubled-55-million-years-ago-global-temperatures-jumped/
HARM on Mon, 21st Mar 2016 1:45 pm
With oil below $40 BBL and staying there and global production hitting new highs daily, it’s hard to see how we’re past Hubbert’s peak right now. Maybe in another 20-30 years, but certainly not right now.
I don’t like to admit it, but we were way off on our past predictions. The BAU oligarchs are clearly much better at kick the can than anyone here realized, and extractive technology clearly has made some significant gains in the past decade.
Apneaman on Mon, 21st Mar 2016 1:46 pm
Boat, they are not separate ya fucking idiot. You just can’t handle it that when you look at the system in it’s entirety – when you connect the dots, it’s blatantly obvious that it is failing and only a select few are prospering. The same ones who own the media and the politicians. These guys.
Oxfam says wealth of richest 1% equal to other 99%
http://www.bbc.com/news/business-35339475
This is what and who you are defending boat – the masters of the world. Our owners. I guess you like being a fucking slave. The way you cheer this arrangement reminds me of a person with Stockholm Syndrome. Go ahead keep defending and supporting your masters little slave. Sheep really is the best description for the majority of apes.
Outcast_Searcher on Mon, 21st Mar 2016 1:58 pm
First, normally supply and demand curves aren’t linear. Motorist demand for oil products (diesel and gasoline) is extremely inelastic, but they change when the price gets real low or real high, so again, the curves shouldn’t be linear.
Second, the idea that we can’t afford cheap oil when we afforded MUCH more expensive oil for years while the global economy continued to grow just fine is completely wrong.
And of course, let’s always chase the “global economic collapse” meme, and completely ignore how fracking has completely changed the picture for dry gas, then for wet gas, and recently, for oil.
And we haven’t recently had a depression. Making things up and ignoring the definitions of words only greatly detracts from the author’s credibility.
Very low oil prices, if they persist (even with spikes) will be VERY good for the global economy, because it will be VERY good for the typical consumer. It will provide a buffer of time for the difficult and decades-long transition toward a greener economy via things like BEV’s.
Oh, and Onlooker, it’s nonsense that “$147 oil crashed the economy”. The global housing bust, fueled by foolishly leveraged derivatives crashed the global economy. And the price of oil was really more like $135ish for a few weeks near the peak, which is the price that counted for people buying gasoline. Why cite a one time spike? Oh, so it sounds more dramatic.
Practicalmaina on Mon, 21st Mar 2016 2:17 pm
Outcast searcher, I disagree use is that inelastic, slowing down on a highway with an everage speed of 75 by 15 mhp will reduce usage significantly. Even not on the highway better driving habits can make a substantial differance.
147$oil was a death sentence for the suburban sprawl that was fueling the housing and mortgage bubble. Building cost is tied to oil so materials and just getting a contractor to a site become much more expensive. Not to mention there is no room for mcmansions in industrial areas so people commute long distances to somewhat affordable areas. Until the cost of transportation becomes unworkable, then our corporate economy starts to fall apart.
You can’t eat oil, this current over supplied environment does nothing to help mankind down the road. Other than making sheeple beleive BAU will take care of them.
onlooker on Mon, 21st Mar 2016 2:19 pm
For Goodness sake you cornies if or should I say when we or our children are going down at least let us go down knowing something of what exactly happened ,who made it happen and who benefited from it happening. Sigh.
GregT on Mon, 21st Mar 2016 2:24 pm
“The global housing bust, fueled by foolishly leveraged derivatives crashed the global economy.”
There was no global housing bust, and the US-centric mortgage backed security swindle did not cause the world’s economies to enter crisis mode. It was the increase in the price of oil from $18 /bbl in 2002, to $147/bbl in 2008, that brought global economies to their knees. Oil prices at or near $40/bbl today are still twice what they were in 2002, and we still cannot recover due to high cost oil, and the hangover of trillions upon trillions of dollars in debt.
GregT on Mon, 21st Mar 2016 2:58 pm
“Very low oil prices, if they persist (even with spikes) will be VERY good for the global economy, because it will be VERY good for the typical consumer. It will provide a buffer of time for the difficult and decades-long transition toward a greener economy via things like BEV’s.”
While oil prices may be low-er they are not “very low”. If anything, low-er oil prices have slowed the infinitesimally small transition that was already occurring. Good for the economy, and the consumer in the short term. VERY bad for the economy, the consumer, and life as we know it on the planet Earth, long term.
twocats on Mon, 21st Mar 2016 3:11 pm
A lot of people bought homes or took out home equity on razor thin budgets for mortgages or loan repayments (respectively). When oil prices started climbing, first in 1999, and then in earnest starting in 2004, it drove a number of household budgets into the red. The flight away from housing and equity into cash, gold, and oil is what drove the price of oil from a high price to a ridiculous price. So it was a feedback loop.
Would oil have gone all the way to $147 w/o the housing crash? No. Would the housing crash have happened as quickly as it did w/o the onset of conventional peak? Probably not.
One last note, this article is pretty bad (has a lot of questionable statements), and that mustard-vomit chart is all but useless.
Apneaman on Mon, 21st Mar 2016 3:12 pm
Outcast_Searcher, you’re a fucking corny parrot. All you do is parrot what Rusty and your other heroes say. If rusty&Co say $40 is cheap oil then it’s cheap oil. Talk about spreading memes retard. Like Greg just pointed out for the umpteenth time – $18 /bbl in 2002. That price was doable.
The entire 20Th century infrastructure – roads, bridges, hospitals, schools, ports, air ports, MIC, etc – was built on that price or lower. Cannot be maintained any more. Falling down and not being fixed.
penury on Mon, 21st Mar 2016 3:32 pm
I suppose that the majority of oil and oil products are used in the manufacture of. and distribution of. those items which you purchase not for the tank of gas you used to buy them. Apparently Americans (U,S) think the entire world lives as they do and that the cost of a gallon of gasoline is the most important price in the world. Only in America.
marmico on Mon, 21st Mar 2016 4:06 pm
No the majority of refined petroleum products are transportation fuels – gasoline, diesel, jet fuel – gasoline being ~45% of total products.
Another peak oil nutter that doesn’t even know the components of the finished petroleum product slate.
marmico on Mon, 21st Mar 2016 4:16 pm
$18 /bbl in 2002. That price was doable.
Cherry pick your data point on behalf of tiny brain GreggieTee, fuctard. Why don’t you pick the year that your miserable life began. Call it 1980.
https://research.stlouisfed.org/fred2/graph/?g=3QNb
That price was doable. Just like every other year.
GregT on Mon, 21st Mar 2016 4:38 pm
I remember the early 80s well. I was working in the oil and gas industry at the time. That was the one and only time in my life that I ever lost a job. The entire industry in Canada pretty much shut down.
Extremely difficult times. If you were to cherry pick my birth year, crude was $1.80 in 1961 dollars, or $13.85 in 2013 dollars. Very doable indeed. My dad brought home the only income, and a home cost around 1.5X his annual middle class salary. Those days are over.
GregT on Mon, 21st Mar 2016 4:38 pm
http://chartsbin.com/view/oau
Apneaman on Mon, 21st Mar 2016 4:47 pm
marmi, you’re a proven liar and deceiver many times over. I stooped clicking on your links a long time ago. You have ZERO creditability – you earned it.
marmico on Mon, 21st Mar 2016 5:17 pm
The Crack Head Ape can’t process the data which says that the doom porn oil affordability narrative is bunk.
Don’t moonlight when it comes to numeracy. Stick to your day time job of doom porn aggregation.
Apneaman on Mon, 21st Mar 2016 5:56 pm
So you like the links eh? Read em while you can the internet ain’t gonna last.
The world’s energy supply relies on water. Guess what we’re running low on?
http://grist.org/climate-energy/the-worlds-energy-supply-relies-on-water-guess-what-were-running-low-on/
shortonoil on Mon, 21st Mar 2016 6:30 pm
“There has been no ‘drop in demand’ for oil. Whoever wrote this article is retarded.”
In 2012 the world burned 32 Gb of oil and discovered 4 to replace it. That 4Gb cost $75 billion to find, or almost $20/ barrel. How much per barrel would it have cost to have found all of the 32GB needed to replace what was burned? Probably a lot more than the industry had to spent? With oil today at $39 the industry is not receiving enough to pay for the full life cycle production cost of the product. It is working through its reserves, and when they are gone so also will be the oil age. The industry can not afford to replace them.
There has been no drop in demand because the price fell 70%. To keep demand even with production is costing the industry $2.3 trillion per year in revenues. No business can long survive a 70% in revenue, and survive for long. That includes the petroleum industry!
http://www.thehillsgroup.org/
makati1 on Mon, 21st Mar 2016 7:26 pm
Ap, you crossed the techie line when you stated that the internet is not eternal! I keep saying the same thing in many ways and am always slammed by the techie crowd. They cannot imagine a world without the internet. Anyone over 30 can. They lived in one. Imagine having to physically go to a bank with your paper book to get your money or cash your paper paycheck. No porn unless you buy it in a dirty little shop off some alleyway. (Yes, as a 20 something, I visited a few of those. I don’t need that stimulant now. lol)
The world, she is a changing…
marmico on Mon, 21st Mar 2016 8:26 pm
What the $8 maximum affordable consumer oil price in 2020 ETP fuctard shows up.
Truth Has A Liberal Bias on Tue, 22nd Mar 2016 5:35 am
You retarded fuckers don’t know the difference between a ‘drop in the demand for oil’ and a ‘lower rate of increase in the demand for oil’. Call it whatever the fuck helps you ass hats sleep at night but there has been no ‘drop in the demand for oil’. Demand for oil is increasing. It is not increasing as rapidly as it was a short time ago and that’s perhaps where all you fucking retards get confused.
Davy on Tue, 22nd Mar 2016 6:19 am
Montreal dumbass that is the point you yourself admitted to: “It is not increasing as rapidly as it was a short time ago”. Your dumbass is in denial. Your bragging on that “ittybitty” portfolio you are living on is at risk. Get a grip that the decline in the rate of demand growth spells the end of your dumbass way of life. Get a grip that what goes up does not go up forever. What goes up can and may drop dangerously. Get a grip that sometimes you need to get a grip because reality says so.
shortonoil on Tue, 22nd Mar 2016 6:53 am
By our calculations the petroleum industry will spend $39 trillion more to produce oil, and its products than they will receive in revenue over the next decade. As oil is an essential commodity for our civilization the difference will have to be paid by the remainder of the economy. To raise the needed revenue the general economy will need to be stripped to its bare bones. The end result is likely to be the bankruptcy of modern civilization!
http://www.thehillsgroup.org/
Davy on Tue, 22nd Mar 2016 7:03 am
“Output as $100 Oil Inheritance Spent”
http://www.bloomberg.com/news/articles/2016-03-22/drillers-can-t-replace-lost-output-as-100-oil-inheritance-spent
“In 2016, for the first time in years, drillers will add less oil from new fields than they lose to natural decline in old ones.”
“About 3 million barrels a day will come from new projects this year, compared with 3.3 million lost from established fields, according to Oslo-based Rystad Energy AS. By 2017, the decline will outstrip new output by 1.2 million barrels as investment cuts made during the oil rout start to take effect. That trend is expected to worsen.”
“Companies cut capital expenditure on oil and gas fields by 24 percent last year and will reduce that by another 17 percent in 2016, according to the International Energy Agency. That’s the first time since 1986 that spending will fall in two consecutive years, the agency said Feb. 22.”
shortonoil on Tue, 22nd Mar 2016 12:16 pm
From the article above:
“Global demand and supply will balance very quickly because we’re seeing extended decline from producing fields.”
This is where we think they are overlooking a key factor in the supply/ demand relationship by ignoring the energy contribution of petroleum. It takes energy to produce oil, and for petroleum to act as an energy source (which is the primary reason why it is used) that energy must come from the petroleum itself. When production declines so also will the demand for oil by an amount equal to the energy required to produce it. The Etp Model tells us that is now about half. The balancing of the market will therefore take much longer than generally expected. The industry will have long since gone bankrupt before that occurs; and the rest of the economy will have followed it.
http://www.thehillsgroup.org/