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Page added on May 17, 2016
Peak Oil: Where To Begin?
The unpleasant truth now and soon is that the ready supply of oil and gas which we almost always take for granted [the occasional price spike notwithstanding] is on its way to becoming not-so-ready. A host of factors now in place are steadily converting possibility into likelihood. Thinking that we’ll just implement a few crash programs to straighten out that potential mess is a nice thought, but we simply do not have the means to make that happen—not the technological capabilities, not the personnel, not the industries, not the leadership … yet. Clearly, we do not have enough time to do it all with effortless ease and minimal disruptions.
The farther we continue to travel down that path which relies on fossil fuels to sustain us rather than on a new one marked “new future with new and necessary alternatives”, the longer and more difficult will our backtracking be. What supplied us on the front part of the journey will no longer be there for us on the ride back. We’re going to have to create entirely new systems and infrastructures and modes of production and transportation—or at the very least re-build extensively—in order to adapt to new sources of energy. So relying on current conditions and practices and customs and tinkering only along the edges simply won’t work because we are going to be dependent on entirely different energy resources.
A recent article highlighted the fact that many oil producers are continuing production efforts even though they are operating at a loss. Many factors obviously contribute to such an incongruous decision, chief among them the costs associated with resumption. How long should we expect those trends to continue?
With low prices anticipated for an extended period of time—which is a boost for consumers but not such a gift to oil producers—what’s the logical outcome? Should we be surprised if production efforts are curtailed even more than they have been [see this]? How can anyone honestly and honorably ignore the consequences of production shutdowns as they relate to production supply?
What magic is being counted on to maintain supply status quo under those conditions?
We are all free to ignore these matters, assuming Someone in the Know is working things out right this minute. We can fall back on our internal defense mechanisms, searching out that little nugget of hope or welcome possibilities for future energy supplies and latch onto that, dismissing all of the other legitimate factors.
These and related efforts won’t alter the underlying realities about what we can expect as a finite resource marches down the other side of the slope. None of these considerations bring much joy to the public or to the messengers. But what’s worse: pretend we have no problems and say nothing [or mislead]; or address the issues, point out the challenges, and begin the necessary public, political, and industrial dialogue which is going to have to take place eventually?
Does it make more sense to start the process of dealing with the long-term impact of a depleting supply of a finite resource while we still have some reasonable options and at least an ample enough supply to provide for the actual transition efforts? We don’t have to, of course. We are free to choose, just as we are free to decide which spokespeople we prefer as a source for information and then act accordingly.
Making sure that facts—all of them—are part of that decision in the first instance may be the best decision of all right now.
Peak Oil Matters by Rich Turcotte
60 Comments on "Peak Oil: Where To Begin?"
Hello on Tue, 17th May 2016 9:10 am
Peak oil is roughly 30 to 50 years in the future. Most of the posters here will be compost by then. PO is not worth worrying about.
rockman on Tue, 17th May 2016 9:22 am
“A recent article highlighted the fact that many oil producers are continuing production efforts even though they are operating at a loss.” And once more I assume the writer is confusing the production cost of existing wells with the cost to develop new wells.
Either way no company is intentionally losing money by continuing to produce. An operator will abandon a producing well that has a negative cash flow. They might suffer a small loss for a short time but not for long. Nor will an operator knowingly drill a new well if that well won’t provide an acceptable ROR. But money losers will be drilled as they have always been drilled. That’s the nature of the business. An Eagle Ford well that appeared profitable 3 years ago might not now recover its investment. But if it’s still producing a positive cash flow at 50 bopd under current pricing it will be produced. Either buy the original company or the new company that acquired the well from bankruptcy.
PracticalMaina on Tue, 17th May 2016 9:24 am
Yeah the bankrupt fracking producers, and oil nations in virtual states of civil war around the world are gonna keep cranking out harder and harder to extract oil forever at ever increasing levels, it just makes sense……as the middle east turns into a giant furnace to boot, the future is bright and hot and unforgiving.
Davy on Tue, 17th May 2016 9:27 am
Hello, peak oil is now. It is a process and it is the approach and the nearness of our global system to this phenomenon and others that marks a paradigm shift from growth to decay.
Hello on Tue, 17th May 2016 9:34 am
Davy, PO is not now. Now is a glut. PO will be high price and low volume.
…unless, God forbid, oil is made obsolete, substituted with something else…
$100 made the fracking boom. Can you imagine what $500 oil will do? Every abled body will be digging up the planet in the search for oil.
Davy on Tue, 17th May 2016 9:59 am
Why is peak oil and a supply glut exclusive? Maybe you need to study up on the real meaning of peak oil. I would also recommend studying related topics and how they interact because we live in a dynamic living world not a linear vacuum found between our eyes.
Hello on Tue, 17th May 2016 10:05 am
>>> Why is peak oil and a supply glut exclusive?
It is certainly not exclusive. But unless there is a substituting energy source to pick up the slack, the theory of glut and PO is rather far fetched.
Remember, people need energy. If they get it cheaper somewhere else, PO might very well happen, but it will be a non-event. If they can’t get it cheaper somewhere else, they will fork over their first born to get oil.
GregT on Tue, 17th May 2016 10:29 am
“they will fork over their first born to get oil.”
And after they no longer have a first born to fork over?
Davy on Tue, 17th May 2016 10:30 am
Hello, there is no substituting oil we know of. Peak oil is more than price it is the physics of oil in it application to our civilization. If that relationship is compressing with decay and decline we can say we have peak oil dynamics. I do not want to get lost in the semantics that is not my specialty. What is important at a fundamental existential level is the relationship that yields energy for humans and that energy yield in relationship to our civilization. Call it whatever you want but the reality is no different than any other ecosystem. A species must have energy to survive. All species have foundational energy sources related to their ecosystem and ours is oil and oil is a fundamental reason for human instability now.
Hello on Tue, 17th May 2016 10:35 am
Davy.
I tend to agree that oil is of existential value to the civilization. The people will go to extraordinary length and costs to obtain it to maintain the civilization.
The fact that prices are low for such an existential ingredient suggest that we’re far from the peak.
PracticalMaina on Tue, 17th May 2016 10:37 am
Or that the fundamentals are off, people who produce something that everyone with currency consumes, should not be declaring bankruptcy at the high rates they currently are.
Hello on Tue, 17th May 2016 10:44 am
GregT: And after they no longer have a first born to fork over?
People who are not able to afford oil are not productive. Anybody who is productive benefits from an external energy input and the resulting improved productivity.
If you’re not productive there is no reason why should be able to afford oil, it’s not meant for you. You will only waste it.
GregT on Tue, 17th May 2016 10:46 am
“The fact that prices are low for such an existential ingredient suggest that we’re far from the peak.”
When the prices are lower than the costs to produce much of such said existential ingredient, that would suggest that we already have a problem. People are running out of first born children to fork over. The next logical step would be to go into debt. Debt is bad for future economic wellbeing. Without healthy functioning economies, less and less people can afford to buy higher priced oil, which in turn causes the producers to go into debt, or to go out of business.
It isn’t the volume of oil produced that matters, it is the affordability of that oil, and the energy available to the overall economy.
PracticalMaina on Tue, 17th May 2016 10:49 am
Goldman Sachs now trading huge volumes of gas, so increased volatility from the dbags who almost bankrupted the EU, this may get interesting.
http://www.upi.com/Business_News/Energy-Industry/2016/05/16/Goldman-Sachs-now-bigger-than-Exxon-Chevron-in-nat-gas-trading/6961463422352/?spt=slh&or=8
No wonder they are calling the glut over, profits first, honesty be damned, just ask Greece.
PracticalMaina on Tue, 17th May 2016 10:58 am
Hello, I have a feeling your definition of productivity is a little off. The largest consumers per capita are largely in service based economy’s such as ours. Our service economy creates the illusion of progress, prosperity and happiness, but really it is all a dangerous facade. The city of Flint consumes plenty of oil, but cannot consistently produce healthy water. In other country’s people are able to produce things that are actually vital to their own existence with only their own biological energy input. Really the people who produce the most are probably Asian factory workers whose own lifestyle uses a tiny amount of oil because they are so poorly paid.
Oil may produce an increase in GDP but it also causes unsustainable growth, urban sprawl, huge cost to the healthcare system, war, climate change….
GregT on Tue, 17th May 2016 11:04 am
“Anybody who is productive benefits from an external energy input and the resulting improved productivity.”
Productivity requires energy. The more people that are unable to benefit from an external energy source, the greater the decrease in productivity. Fiat money is debt, or a claim on future productivity. As productivity declines, debt increases. Infinite exponential growth in a finite environment is a physical and mathematical impossibility. The limits to growth will be met when future productivity is not great enough to pay back the claims made on that future productivity. The result is mountains of un-repayable debt.
GregT on Tue, 17th May 2016 11:11 am
The problem does not lie with a lack of energy, it lies within a failed economic ideology based on infinite exponential growth.
penury on Tue, 17th May 2016 11:27 am
Denial is a wonderful crutch. Never argue with a religious zealot. They do not listen, and can never change their minds due to deep cognitive disconnect. If faith is lost all hope is gone. Isn’t that true “Hello”?
Hello on Tue, 17th May 2016 11:36 am
Isn’t that true “Hello”?
Right back at you, penury.
It is amazing how doomers had to bend reality from high price, low volume = peak to low price, high volume = peak.
Talk about persistent denial.
But at least it makes for entertainment.
Hello on Tue, 17th May 2016 11:43 am
Practical Mania: Our service economy creates the illusion of progress, prosperity and happiness, but really it is all a dangerous façade
I agree with you that progress does not equal happy and health life.
Yet for some strange reason most people and all politician are crying ‘growth’ and ‘more’ constantly. And the economy delivers. But you’re right, that doesn’t make ‘growth’ good. However this is beside the point of PO, don’t you agree?
GregT on Tue, 17th May 2016 11:43 am
$20/bbl oil, and $147/bbl oil are not the same things Hello. Pretending otherwise is disingenuous, or what appears more than likely in your case, pure denial.
Hello on Tue, 17th May 2016 11:46 am
GregT: The more people that are unable to benefit from an external energy source
If you ever cut wood by hand for a whole winter heating you will agree, that gas for a chain saw can go very expensive and still provide an enormous productivity benefit. $100 is very cheap, $500 is cheap, $1000 is affordable.
GregT on Tue, 17th May 2016 11:47 am
“Yet for some strange reason most people and all politician are crying ‘growth’ and ‘more’ constantly.”
That’s because without a certain percentage of continued exponential growth, the entire system becomes mired further and further into debt, until it implodes in on itself. Ponzi schemes never end well, at least not for the vast majority.
dave thompson on Tue, 17th May 2016 11:49 am
Hello, can you direct me to where you are getting the majority of your information?
GregT on Tue, 17th May 2016 11:53 am
“$100 is very cheap, $500 is cheap, $1000 is affordable.”
We aren’t talking about how much productivity oil provides, we are talking about affordability. If I don”t have an income that allows me to pay $1000, that oil may as well be unobtainium. If there aren’t enough buyers for oil at that price, the producers wouldn’t be extracting it.
Hello on Tue, 17th May 2016 11:54 am
dave Thompson:
What information do you need?
That consumerism and growth doesnt’ equal happiness?
It’s from my life experience.
That gas can go to $100/gallon and I will still buy it before cutting wood by hand?
It’s from my experience of cutting wood.
That external energy increases productivity?
From my life experience rototilling by hand and then by machine.
GregT on Tue, 17th May 2016 11:57 am
“That gas can go to $100/gallon and I will still buy it before cutting wood by hand?”
Assuming that you have an income that allows you to afford to pay $100/gallon, and that the fiat currency in question retains enough confidence that people will even accept it as trade.
rockman on Tue, 17th May 2016 11:59 am
Davy – As pointed out numerous times $100+/bbl and the resultant shale boom are clear signs of the Peak Oil Dynamic at work. The POD again highlights how completely irrelevant the date of PO truly is.
dave thompson on Tue, 17th May 2016 12:00 pm
Hello, where do you look for the latest information that interests you? Such as what books do you read,or web pages you visit. Can you show us some links on peak oil being 30-50 years out? How do you draw that conclusion?
Hello on Tue, 17th May 2016 12:08 pm
dave Thompson
The 30/50 year number was simply drawn from fresh air. Neither I nor anybody else on the planet has any idea when PO will be.
However we can estimate from several ‘hints’ given by our current state of affairs and from experiences from the past, that PO is not now.
And one of those very strong hints is low price AND high volume.
farmlad on Tue, 17th May 2016 12:09 pm
Gregt If gas was a thousand buck how Many hundreds of thousands of bucks would your chainsaw cost. Or just a new chain. Better to build yourself a rocket stove and burn branches and keep your overalls on. If the wife complains let her cut the wood.
onlooker on Tue, 17th May 2016 12:09 pm
How come some do not want to see the obvious. We are going after the more difficult and expensive oil. This cannot help but have the commensurate effect on the Economy. As our expert Rock says the peak oil dynamic is well underway as the fortunes of Oil and the Economy reinforce each other.
dave thompson on Tue, 17th May 2016 12:11 pm
Great answer Hello, But back to my question where do you get your information from? Can you give me a link? What web sites do you read? Can you give us a link? I would be interested in reading the info that you are referring to.
GregT on Tue, 17th May 2016 12:13 pm
farmland,
If gas is a thousand bucks, better be well on your way to be sufficient at growing your own food. There are plenty of ways to keep warm at night, without a chainsaw. There aren’t many ways to feed ones self, when a head of cabbage costs 200 bucks, and you are unemployed.
GregT on Tue, 17th May 2016 12:16 pm
“As our expert Rock says the peak oil dynamic is well underway as the fortunes of Oil and the Economy reinforce each other.”
^^^This^^^
Hello on Tue, 17th May 2016 12:18 pm
dave Thompson
My main source for all PO related is
http://www.peakoil.com
I read the posts in the forums, I follow the links members post. I read the news articles and the comments. And then I try to make sense of it all.
dave thompson on Tue, 17th May 2016 12:24 pm
Thanks hello for the info proving to one and all that you are completely full of shit and just here to troll.
Hello on Tue, 17th May 2016 12:27 pm
dave Thompson
So you’re saying http://www.peakoil.com is not a good source of information?
That certainly is a surprise to me.
I will keep that in mind and take member post with a grain of salt in the future…
dave thompson on Tue, 17th May 2016 12:28 pm
No not saying that at all, what I said was that you Hello are completely full of shit and just here to troll.
Hello on Tue, 17th May 2016 12:31 pm
dave Thompson
Thank you for your honest opinion.
I can guarantee you, that you’re wrong.
Could you at least have the decency to tell me how you come to that conclusion?
dave thompson on Tue, 17th May 2016 12:35 pm
Yes Hello, as I approached the bridge I could smell you a mile away.
Hello on Tue, 17th May 2016 12:39 pm
dave Thompson
So does that mean you don’t have a good answer and you came to the conclusion because I don’t share the world view of the crowd?
Or was it that I prefer paying for expensive gas for a chain saw instead of freezing in winter?
oh well, maybe next time….
GregT on Tue, 17th May 2016 12:45 pm
“Or was it that I prefer paying for expensive gas for a chain saw instead of freezing in winter?”
Human beings have lived comfortably throughout winters on this planet for hundreds of thousand of years without chainsaws. Those who did not have food or water, didn’t fare so well.
As dave t said above, you are completely full of shit Hello. Grow up, or go away.
PracticalMaina on Tue, 17th May 2016 12:46 pm
I am gonna get a pv saw and charge you a lot of food to cut your wood. That is why peak oil is here, if it forces people to not participate in the economy, such as the long term unemployed that have given up looking for a job to commute to, then the oil cos are not going to have the capital to continue to crank out the huge volume of oil we currently consume.
Apneaman on Tue, 17th May 2016 12:54 pm
Like I said earlier today – it’s a comedy show until we’re done.
Australian Energy Boss Emails Climate Change Skeptic Handbook
“The handbook explains how to argue that climate-change is not human-made.
Prominent businessman and donor to the Australian Liberal Party, Roger Massy-Greene, accidentally emailed hundreds of politicians and elites a 16-page handbook explaining how skeptics can successfully argue against the idea that human activity is causing climate change, Australian Broadcasting Corporation reported Monday.
Australian climate-change scientist, Professor Tim Flannery, who won the Australian of the Year award for environmental research, slammed Massy-Greene’s actions.”
http://www.telesurtv.net/english/news/Australian-Energy-Boss-Emails-Climate-Change-Skeptic-Handbook-20160517-0001.html
GregT on Tue, 17th May 2016 1:02 pm
I bought a very little used Stihl electric chainsaw. Saws through 16 inch logs like butter, and really quiet. The trick is in getting the logs close enough to an electrical outlet. Fortunately, my property backs on to several thousand acres of forest. In the future, I might need to borrow one of my neighbour’s horses. Hopefully not.
shortonoil on Tue, 17th May 2016 2:07 pm
“$100 is very cheap, $500 is cheap, $1000 is affordable.”
$500 oil would put gasoline at $16.50 a gallon. Most people couldn’t even afford to go to work with gas prices at that level. The economy would just completely shut down. Thinking that oil could reach $500 is just plain stupid.
shortonoil on Tue, 17th May 2016 3:15 pm
There are two ways to identify the beginning of the end of the petroleum age. The economic approach, and the thermodynamic one. To be representative of reality they must eventually arrive at the same place, but they need not do so at the same rate. Most people prefer the economic approach because it appears to be simpler. The economic approach, however, can not account for the debt that accumulates outside of the industry that is the result of its decline. Neither can it account for the cost of replacing the reserves that the industry is extracting which they are not now replacing. According to the Etp Model that cost, as a result of the depletion process, is now $2.2 trillion per year, and is accelerating. That is $65 per barrel. By 2025 it will have become $488/ barrel produced. The present $65 figure is approximately the difference between the average full life cycle production cost and the price; and that difference will be increasing exponentially with time.
Below is an article that some may find interesting:
http://www.zerohedge.com/news/2016-05-17/can-big-oil-survive-todays-prices
http://www.thehillsgroup.org/
Hello on Tue, 17th May 2016 3:19 pm
I do not care that the world is producing less oil now than it did in July 2015. Ok so the amount of oil produced according to EIA and JODI data in July 2015 was 80,525,000 barrels per day and yes we are producing less oil now than at that time and yes we are likely to produce less oil in the future but oil is cheap to buy right now and there is lots of oil all over the place so it’s not peak oil until 40 or 50 years when things are different. I know this ti be a fact based on my observations of oil production metrics over time and my forecast of future trends. Inn conclusion the world has never produced as much oil as it did in July 2015 and it perhaps never will but that doesn’t mean we’re past peak oil. If you don’t understand that you’re an idiot.
rockman on Tue, 17th May 2016 3:20 pm
What…the Rockman worry about the actual date of global PO? Not only is it not a worry it doesn’t even cross his mind until someone brings it up. LOL.