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Biggest Surprise Post Peak

General discussions of the systemic, societal and civilisational effects of depletion.
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Re: Biggest Surprise Post Peak

Unread postby mos6507 » Wed 07 Apr 2010, 22:28:02

$this->bbcode_second_pass_quote('Ludi', '
')Yeah, just getting poorer and poorer isn't very exciting, is it? :cry: Where's all the Mad Max drama?


I think we should wait and see what the world will be like after a few years of unstoppable 3-6% production decline rates rather than the current world situation of depressed demand with Saudi arabia still with spare supply available to bring online.
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Re: Biggest Surprise Post Peak

Unread postby thuja » Wed 07 Apr 2010, 22:30:17

$this->bbcode_second_pass_quote('mos6507', '')$this->bbcode_second_pass_quote('Sixstrings', '
')You only speculate in commodities that you think will rise in price, and that comes from demand overtaking supply.


The moral for peakers in all this is that price instability is a function of speculation. This speculation obscures the fundamental "pure" oil prices that we would otherwise face if it were purely a matter of supply and demand.

So we can't just interpret the charts in a self-serving manner.

What peakers tend to do is interpret all high prices as reflecting geological depletion, without factoring in speculation. Then when prices tank, it's interpreted solely as demand destruction (aka peak oil broke the back of the world economy, and causing GD 2.0).

The psychology of speculators is no different from Wall Street in the sense that they can push prices high in a bubble and then cash out and cause prices to tank.

Any analysis of peak oil should be much more nuanced than merely obsessing on the oil price du jour.

For instance, I don't think TOD has done a good job of really digging into speculation, certainly not as much as the 60 minutes piece that was aired right after oil prices tanked. That piece explained that speculation in the oil markets is a relatively new phenomenon, opened up via the same sort of lax regulatory policies and the desire among investors to find some new way to game the system when other investments run dry. This is really something that should be better understood. I've heard that some new controls were put in place to try to limit oil speculation but I don't have any details on it. We really should have a better handle on this so we don't have to guess how much oil prices reflect speculatory frenzy vs. underlying supply and demand.


Quick simple question Mos- do you think speculation could run up oil prices so dramatically in the absence of oil production limitations?
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Re: Biggest Surprise Post Peak

Unread postby mos6507 » Wed 07 Apr 2010, 22:36:35

$this->bbcode_second_pass_quote('AAA', '
')I recently read a article making fun of Matt Simmons because of his troubled past in predicting oil production and prices.


And he deserves it. The cliche' phrase is that we'll never know we've peaked until it's in the rear-view mirror and that's definitely true. The downward slope of Hubbert's curve needs to fill itself in more before it becomes incontrovertible. Look at Cantarell. The mexicans STILL think they can restore production.
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Re: Biggest Surprise Post Peak

Unread postby mos6507 » Wed 07 Apr 2010, 22:44:00

$this->bbcode_second_pass_quote('thuja', '
')Quick simple question Mos- do you think speculation could run up oil prices so dramatically in the absence of oil production limitations?


Yes, the final explosive runup to $147 where it was jumping like $5+ dollars a day could not be explained by oil production limitations. You really have to squash the peaks and valleys over a longer timeframe in order to divine the actual fundamental oil price if it were driven solely by supply and demand. So I think when it was at $147 it probably should have been at maybe $110-120. Not exactly cheap, but not TEOTWAWKI either. Likewise, the oil prices we've had lately that are more or less stable between $75-80 make sense if you factor in the recession-based demand destruction.

Is the era of cheap oil over? Yeah. The oil spike and the crash were both anomolies. But we're seeing a gradual but steady increase in price when you average everything out. That's what I'm paying attention to, although of course we have to somehow navigate through the market-driven fluctuations regardless. But if you want to really measure geological depletion, you have to separate out the statistical noise of speculation otherwise there is no way to make any sort of intelligent predictions.
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Re: Biggest Surprise Post Peak

Unread postby shortonsense » Wed 07 Apr 2010, 22:47:41

$this->bbcode_second_pass_quote('mos6507', '')$this->bbcode_second_pass_quote('AAA', '
')I recently read a article making fun of Matt Simmons because of his troubled past in predicting oil production and prices.


And he deserves it. The cliche' phrase is that we'll never know we've peaked until it's in the rear-view mirror and that's definitely true. The downward slope of Hubbert's curve needs to fill itself in more before it becomes incontrovertible. Look at Cantarell. The mexicans STILL think they can restore production.


Perhaps because they have done it before. Mexican oil production peaked in the early 80's. Dropped for awhile...peaked again in about 1999. Peaked again in around 2003.

Certainly Hubbert didn't imagine more than one....but with Mexico already pulling an extra 2 out of their butts, another one certainly is a possibility.
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Re: Biggest Surprise Post Peak

Unread postby thuja » Wed 07 Apr 2010, 22:59:25

$this->bbcode_second_pass_quote('mos6507', '')$this->bbcode_second_pass_quote('thuja', '
')Quick simple question Mos- do you think speculation could run up oil prices so dramatically in the absence of oil production limitations?


Yes, the final explosive runup to $147 where it was jumping like $5+ dollars a day could not be explained by oil production limitations. You really have to squash the peaks and valleys over a longer timeframe in order to divine the actual fundamental oil price if it were driven solely by supply and demand. So I think when it was at $147 it probably should have been at maybe $110-120. Not exactly cheap, but not TEOTWAWKI either. Likewise, the oil prices we've had lately that are more or less stable between $75-80 make sense if you factor in the recession-based demand destruction.

Is the era of cheap oil over? Yeah. The oil spike and the crash were both anomolies. But we're seeing a gradual but steady increase in price when you average everything out. That's what I'm paying attention to, although of course we have to somehow navigate through the market-driven fluctuations regardless. But if you want to really measure geological depletion, you have to separate out the statistical noise of speculation otherwise there is no way to make any sort of intelligent predictions.




I would agree that speculation influenced the top end and the low end- a couple things though...

Lets take a look at the price of oil over the last twelve years on average...

1998 11.91$
1999 16.55$
2000 27.40$
2001 23.00
2002 22.81
2003 27.69
2004 37.41
2005 50.04
2006 58.30
2007 64.20
2008 91.48
2009 53.56
2010 So far 70.26

We have seen a pretty large drop in price in oil last year due in large part to demand destruction from the Recession. This coming year looks like oil price is heading back up again. So speculation...is just a small part of the puzzle. The real story is that the average price of oil has gone up dramatically over the past 10 years. Why? Well you know what most of us think here...
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Re: Biggest Surprise Post Peak

Unread postby shortonsense » Wed 07 Apr 2010, 23:04:30

$this->bbcode_second_pass_quote('thuja', ' ')The real story is that the average price of oil has gone up dramatically over the past 10 years. Why? Well you know what most of us think here...


Nah...that doesn't work because the price of oil was about as high during chunks of the 70's and early 80's. Cherry picking time frames...tsk tsk.
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Re: Biggest Surprise Post Peak

Unread postby mos6507 » Thu 08 Apr 2010, 00:02:41

$this->bbcode_second_pass_quote('thuja', '
')The real story is that the average price of oil has gone up dramatically over the past 10 years. Why? Well you know what most of us think here...


I wouldn't be here if I didn't believe in peak oil.

I understand the appeal, but the tendency to want to put some magic date on "peak oil" is a waste of intellectual capital.

The euphemism "the end of cheap oil" is perhaps a better description for what we're actually seeing, and that's a term that's fairly ubiquitous in the MSM. It just doesn't have the same doomer connotations as peak oil.

I think the peak oil dating is really a fast-crash concept. When Matt Simmons predicted $200-300 bbl oil, he was parroting from the fast-crash bible. Peak oil doom as a singular event rather than an era.

I also think peakers would be better served by broadening their horizons to all sources of doom, not just peak oil. Dollar collapse is perhaps the first and foremost concern, followed by peak oil, then climate change and population overshoot. I don't really need the imminent threat of peak oil doom to make me a doomer. My plate is full already.

So the thread starter "biggest surprise post peak" reflects this tunnel vision about peak oil rather than the more universal topic of peak everything (ala Limits to Growth).
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Re: Biggest Surprise Post Peak

Unread postby thuja » Thu 08 Apr 2010, 00:20:26

$this->bbcode_second_pass_quote('mos6507', '')$this->bbcode_second_pass_quote('thuja', '
')The real story is that the average price of oil has gone up dramatically over the past 10 years. Why? Well you know what most of us think here...


I wouldn't be here if I didn't believe in peak oil.

I understand the appeal, but the tendency to want to put some magic date on "peak oil" is a waste of intellectual capital.

The euphemism "the end of cheap oil" is perhaps a better description for what we're actually seeing, and that's a term that's fairly ubiquitous in the MSM. It just doesn't have the same doomer connotations as peak oil.

I think the peak oil dating is really a fast-crash concept. When Matt Simmons predicted $200-300 bbl oil, he was parroting from the fast-crash bible. Peak oil doom as a singular event rather than an era.

I also think peakers would be better served by broadening their horizons to all sources of doom, not just peak oil. Dollar collapse is perhaps the first and foremost concern, followed by peak oil, then climate change and population overshoot. I don't really need the imminent threat of peak oil doom to make me a doomer. My plate is full already.

So the thread starter "biggest surprise post peak" reflects this tunnel vision about peak oil rather than the more universal topic of peak everything (ala Limits to Growth).


Agreed Mos...and as you might now I am a slow crasher of the cascading recessions "we're all gonna get poorer" variety. I have always thought that the Peak=fast crash meme was a really bad road for folks following this to go down...but its still a much better meme than Peak=Nothing meme that some throw around.

You have posited the likelihood of a more severe and fast crash out a ways- perhaps 10 -20 years from now?- including massive population die-off that I don't agree with. But I do agree that Peak Oil has started to morph into one of many dire threats to civilization and that we are facing.
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Re: Biggest Surprise Post Peak

Unread postby shortonsense » Thu 08 Apr 2010, 00:24:11

$this->bbcode_second_pass_quote('mos6507', '
')So the thread starter "biggest surprise post peak" reflects this tunnel vision about peak oil rather than the more universal topic of peak everything (ala Limits to Growth).


Nah...peak oil is just a subset of the same overall resource depletion topic, but the piece which seems to have collected a majority of the hangers-on who need it to lend credence to their other ideas, and it certainly has gotten the most press over the decades and centuries as well.

It is interesting that no one has claimed that the towers came down because the government was trying to hide peak fresh water....arguably an even more necessary commodity than oil.
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Re: Biggest Surprise Post Peak

Unread postby thuja » Thu 08 Apr 2010, 00:30:27

In terms of where I have not been surprised...

1- That Conservatives demanded to open everything up for drilling once the threat of high oil prices sunk in.
2- That a ton of money was sunk into biofuels, a horrible idea.
3- That most of the public can be brainwashed to think that there is nothing the matter as long as we just... (pick one- drill more, dig up shale, build nuke plants, etc.)
4- That oil prices rose astronomically and then fell dramatically once a recession started.
5- That the poor have been hit the hardest by astronomical oil prices and by food shortages related to these prices.
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Re: Biggest Surprise Post Peak

Unread postby shortonsense » Thu 08 Apr 2010, 00:54:06

$this->bbcode_second_pass_quote('pstarr', '
')The momentary bump upward in the 1970's was because the US had recently peaked, the dollar was strong, and there were had been two wars in the middle east. Oh, and people like you


How high does someone have to be to confuse "momentary bumps" with near decade long price spikes which continue to this very day?

Oh yeah...find a cooler chart next time.

Look folks! Expensive crude was happening before Pee's great great grandfather was born!

http://www.forbes.com/2008/05/13/oil-pr ... lash2.html

In particular note how oil trended cheaper from way back when it was expensive (late 1800's) to about 1970..when the era of cheap oil ended! ( for those who understand that those lines all going up since then means cheap oil ended nearly 30 years before Colin Campbell got around to noticing )
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Re: Biggest Surprise Post Peak

Unread postby shortonsense » Thu 08 Apr 2010, 01:25:39

$this->bbcode_second_pass_quote('pstarr', '1')880's? Have you lost you mind completely. Idiot


Whats your biggest surprise since peak oil happened pstarr? That your humanure compost pile still reduces your doomstead value and the neighbor with the Mcmansion still gets top dollar when he chooses to sell his? Or that being an "internet editing scientist" draws near hysterical laughter from anyone who I mention this interesting profession to? :lol:
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Re: Biggest Surprise Post Peak

Unread postby mos6507 » Thu 08 Apr 2010, 03:03:39

Shorty and pstarr are both one-trick ponies. Shorty has his "multiple peaks" meme and pstarr has his biorhythm-like "correlation is causation" chart between oil prices and recessions. Neither of them have evolved in their views no matter how much information is thrown at them. In that respect, despite being bitter enemies, they are more alike than they'd ever care to admit.
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Re: Biggest Surprise Post Peak

Unread postby Loki » Thu 08 Apr 2010, 04:28:43

$this->bbcode_second_pass_quote('pstarr', '
')Image

Cool chart. No apparent relationship between recessions and the price at the pump. Until now. Gigantic dip.
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Re: Biggest Surprise Post Peak

Unread postby efarmer » Thu 08 Apr 2010, 08:18:56

One of my biggest surprises is that we insist on eating tilapia when we are so good
at creating delicious and very filling straw men. I think since we love to grow them,
we should consider roasting a few and seeing if they are good to eat.

Having been accused of not caring about the depletion of the fish species,
I promise to concentrate on creating a straw fish, who like a salmon, will
live a rich and wonderful life, and return to it's original, whimsical, stream
of thought to spawn.
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Re: Biggest Surprise Post Peak

Unread postby mcgowanjm » Thu 08 Apr 2010, 08:35:32

$this->bbcode_second_pass_quote('Loki', '')$this->bbcode_second_pass_quote('pstarr', '
')Image

Cool chart. No apparent relationship between recessions and the price at the pump. Until now. Gigantic dip.



Look again at that chart.

1980 was Interest rates at their peak to
crush inflation. Debt derivatives begin
1982 as the Fed brings in shills to Frontrun
the Open Market in Bonds.
Profits from Production transferred to Finance.
1985 BP triples OPEC Reserves w/o One
new discovery.
World PO Plateau nears at 2000.
Reached 9/11.
2007 the Last Depression begins.

Watch the BDI now. IT breaks 2575,
Abandon Ship. Literally :twisted: :evil: 8O 8) Gasoline below $1.50
by Xmas.
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