PeakOil is You
If US oil import is lowest in years, why is oil above $110?
Re: If US oil import is lowest in years, why is oil above $1
by Pops » Tue 05 Mar 2013, 15:55:10
$this->bbcode_second_pass_quote('ColossalContrarian', ' ')the disparity would be greater around the last and most recent spike. Did inflation catch up to the real price or the did real price catch up to inflation?
Hmmm... I don't get what you're asking. "Real dollars" are dollars adjusted for inflation from a specific date. "Nominal dollars" are what was on the pump at the time.
The chart is in May 2012 dollars, so real and nominal price in May 2012 are the same.
Going into the past, nominal dollars bought more due to inflation so $40 oil in 1980 is exactly the equivalent of $113.88 oil today.
Maybe that wasn't what you were asking at all...
The legitimate object of government, is to do for a community of people, whatever they need to have done, but can not do, at all, or can not, so well do, for themselves -- in their separate, and individual capacities.
-- Abraham Lincoln, Fragment on Government (July 1, 1854)
-- Abraham Lincoln, Fragment on Government (July 1, 1854)
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Re: If US oil import is lowest in years, why is oil above $1
by ian807 » Wed 06 Mar 2013, 13:13:47
In a nutshell, here's what's happening to oil prices from a macroeconomic perspective.
1) What the world is *really* purchasing is not oil, but positive NET energy *from* oil, without which oil does no useful work.
2) Even as available oil supplies stay stable or increase slightly, NET energy continues to decline, as it has done since the first well was drilled.
3) Positive net energy from oil is getting scarcer. Like any other commodity that grows scarce, it gets more expensive.
That's it. You can get lost in the details of how this happens (production rates, extraction methods and so on), but the fact that it takes more energy (and money) to get oil from a deepwater rig, or melting bitumen from Canadian "oil" sands, than it does from a shallow straight well in West Texas should be pretty obvious.
1) What the world is *really* purchasing is not oil, but positive NET energy *from* oil, without which oil does no useful work.
2) Even as available oil supplies stay stable or increase slightly, NET energy continues to decline, as it has done since the first well was drilled.
3) Positive net energy from oil is getting scarcer. Like any other commodity that grows scarce, it gets more expensive.
That's it. You can get lost in the details of how this happens (production rates, extraction methods and so on), but the fact that it takes more energy (and money) to get oil from a deepwater rig, or melting bitumen from Canadian "oil" sands, than it does from a shallow straight well in West Texas should be pretty obvious.
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Re: If US oil import is lowest in years, why is oil above $1
by Econ101 » Wed 06 Mar 2013, 22:41:53
Yea, right, 6:1 eroei after you have counted everything at least twice. What's happening to eroei as well design improves and EUR is turning sharply upward?
EOG Resources has developed a new design with much shorter lateral legs with a fracking focus near and around the bore- hole. Production output increases with this design are in the range of 30%-70%.
This is a most promising development as are several other designs. The end result is at least a tripling of previous recovery estimates.
It is this rapidly increasing supply along with improving infrastructure that has oil prices in steep decline, now well under $100/brl.
What does changing price do to eroei? How about improved well design? what is the eroei of natural gas that is sold with an energy adjustment fee?
EOG Resources has developed a new design with much shorter lateral legs with a fracking focus near and around the bore- hole. Production output increases with this design are in the range of 30%-70%.
This is a most promising development as are several other designs. The end result is at least a tripling of previous recovery estimates.
It is this rapidly increasing supply along with improving infrastructure that has oil prices in steep decline, now well under $100/brl.
What does changing price do to eroei? How about improved well design? what is the eroei of natural gas that is sold with an energy adjustment fee?
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Re: If US oil import is lowest in years, why is oil above $1
by Econ101 » Wed 06 Mar 2013, 23:00:08
$this->bbcode_second_pass_quote('ian807', 'I')n a nutshell, here's what's happening to oil prices from a macroeconomic perspective.
1) What the world is *really* purchasing is not oil, but positive NET energy *from* oil, without which oil does no useful work.
2) Even as available oil supplies stay stable or increase slightly, NET energy continues to decline, as it has done since the first well was drilled.
3) Positive net energy from oil is getting scarcer. Like any other commodity that grows scarce, it gets more expensive.
That's it. You can get lost in the details of how this happens (production rates, extraction methods and so on), but the fact that it takes more energy (and money) to get oil from a deepwater rig, or melting bitumen from Canadian "oil" sands, than it does from a shallow straight well in West Texas should be pretty obvious.
1) What the world is *really* purchasing is not oil, but positive NET energy *from* oil, without which oil does no useful work.
2) Even as available oil supplies stay stable or increase slightly, NET energy continues to decline, as it has done since the first well was drilled.
3) Positive net energy from oil is getting scarcer. Like any other commodity that grows scarce, it gets more expensive.
That's it. You can get lost in the details of how this happens (production rates, extraction methods and so on), but the fact that it takes more energy (and money) to get oil from a deepwater rig, or melting bitumen from Canadian "oil" sands, than it does from a shallow straight well in West Texas should be pretty obvious.
This reasoning is wrong. It considers the value of the inputs without considering the value of the outputs. The first lumps of coal were burned in wasteful open fires. Now a lump of coal generates valuable electricity that does an unimaginable amount of work.
Even if you are able to contrive a case of falling eroei it is more than offset by the value of the work being done by the energy produced, which by a gross measure is far greater than in the past.
Oil is not more scarce. Supplies are greater than at any other time in history.
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Re: If US oil import is lowest in years, why is oil above $1
by ian807 » Thu 07 Mar 2013, 13:29:16
$this->bbcode_second_pass_quote('Econ101', '')$this->bbcode_second_pass_quote('ian807', 'I')n a nutshell, here's what's happening to oil prices from a macroeconomic perspective....
This reasoning is wrong. It considers the value of the inputs without considering the value of the outputs. The first lumps of coal were burned in wasteful open fires. Now a lump of coal generates valuable electricity that does an unimaginable amount of work.
$this->bbcode_second_pass_quote('Econ101', '
')Even if you are able to contrive a case of falling eroei it is more than offset by the value of the work being done by the energy produced, which by a gross measure is far greater than in the past.
Econ101, can you please show your work? None of the petroleum engineers in my office, at least, have heard of any major energy efficiency gains lately. We've got more petroleum supply coming though fracking. That's true. The fact that you have to frack to get it, by definition, means you're using more energy, simply because you're adding an extra activity. That's not "contrived." That's "physics."
$this->bbcode_second_pass_quote('Econ101', '
')Oil is not more scarce. Supplies are greater than at any other time in history.
You haven't differentiated "absolute" supply from "available supply." The latter is tied to production rates. The former is what's in the ground that's energetically and economically profitable to extract, refine and distribute. Oil is finite and so absolute supply is declining. Available supply, what's being produced right now, has increased temporarily as we move through the portion of the supply that's been made economically desirable via fracking. The obvious implication of increased production, however, is that you deplete the absolute supply more rapidly.
Here in Houston, CERA is in town. During that meeting, even the ever optimistic BP this week admitted that we have only 54 years of proven reserves left (http://www.bp.com/genericarticle.do?categoryId=98&contentId=7085241) and 60 years of natural gas. Since both of these depend on current rates of consumption and the latter depends on government USGS numbers, and neither takes into account net energy, I think this may be optimistic (I would have put conventional oil reserves at about 43 years at current consumption rates).
Of course, BP's official position is going to be whatever it takes to keep their asset and stock prices up so that financing continues to flow, so I'd take anything they say with several shakers of salt. Remember their self reports about the oil spill?
