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The Cheap Oil Tipping Point

General discussions of the systemic, societal and civilisational effects of depletion.
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Re: The Cheap Oil Tipping Point

Unread postby The Practician » Fri 11 Nov 2011, 19:21:32

$this->bbcode_second_pass_quote('Bruce_S', '
')
i think that the turmoil over the past 5 years (the same turmoil that Deffeyes was worried about which has occurred since peak oil happened in 2005) might be that "serious" turmoil. Think about it for a second, the world for some 6 years now has had no increase in crude oil production. Prior to that, it had been growing at about 2% a year, since the crude oil crisis of the late 70's and early 80's. Prior to that, it had been growing even faster. So what we have already lived through could easily be the "turmoil" needed for people to pay attention, build Volts and understand how we need to electrify transport, conserve and use less, etc etc.


Well bruce, I thought about it for a second, and believe it or not The population didn't stop growing, resources didn't stop being used at unsustainable rates, and debt crisis didn't get solved. I guess I just don't have quite as much imagination as some people do when it comes to assessing the state of the world. That said, if we collectively were to give up all our claims on imaginary future wealth, money that exists mostly in the form of electronic IOU's, it might smooth out the transition away from fossil fuels substantially. Personally, I think the forces of delusion are going to carry the day on this one, and we are in for a rocky ride, but we'll see.
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Re: The Cheap Oil Tipping Point

Unread postby Bruce_S » Fri 11 Nov 2011, 19:37:48

$this->bbcode_second_pass_quote('The Practician', '
')Well bruce, I thought about it for a second, and believe it or not The population didn't stop growing, resources didn't stop being used at unsustainable rates, and debt crisis didn't get solved.


Which is why we have continuing turmoil I suppose. Although you can't blame all those things on stable oil production, you can account for a few of them by noting that obviously efficiency in usage can grow faster than expected. Deffeyes was pretty specific about being less afraid of 2010+ than the time first five years post peak, which would be 2005-1010.

$this->bbcode_second_pass_quote('The Practician', ' ')Personally, I think the forces of delusion are going to carry the day on this one, and we are in for a rocky ride, but we'll see.


Deffeyes is a pretty non-delusional kind of guy, and one of the few who predicted peak oil in advance. It would be interesting to ask him how he thinks have gone in light of his prediction that those first 5 years would be the roughest.
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Re: The Cheap Oil Tipping Point

Unread postby Bruce_S » Fri 11 Nov 2011, 20:02:01

$this->bbcode_second_pass_quote('pstarr', 'I')t should be quite apparent to those whose heads are not stuck up their various aliases that Hamilton's thesis on the Oil-Expense Indicator and oil-shock financial oscillations describe perfectly this very real very current tipping point that has thrown the world's economies into a joint cluster f@ck.


Hamilton rocks. Fortunately, as an economist type, he is also able to explain coherently why all these tiny decisions we as humans make to mitigate against peak oil will matter. Live close to work, ride a bicycle, contemplate thy navel, be good to your fellow man, and worry ye not about zombies and starvation.
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Re: The Cheap Oil Tipping Point

Unread postby Bruce_S » Sat 12 Nov 2011, 16:04:13

$this->bbcode_second_pass_quote('pstarr', '')$this->bbcode_second_pass_quote('Bruce_S', '')$this->bbcode_second_pass_quote('pstarr', 'I')t should be quite apparent to those whose heads are not stuck up their various aliases that Hamilton's thesis on the Oil-Expense Indicator and oil-shock financial oscillations describe perfectly this very real very current tipping point that has thrown the world's economies into a joint cluster f@ck.


Hamilton rocks.
What is an "economist type?" and how does that grant Hamilton pre-recognition of an unknown outcome, i.e. mitigation?


An "economist type", you know, one of those guys who buys into substitution, thinks that investment will cause supply to appear, builds their models on infinite growth and cost/supply curves, and who peak oilers roundly chastise as being absolute idiots and not even part of a science..unless they agree with us. And Hamilton is one of the few who has studied the history of the business well enough to spot points often ignored by others, knowledge upon which he can then base better guesses into the future than..say...us.
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Re: The Cheap Oil Tipping Point

Unread postby sparky » Sat 12 Nov 2011, 17:19:43

.
To be fair , there is a strong "economic " side to Peak oil ,
certainly , substitution and accommodation will take place willy nilly
even the most dedicated survivalists practice a form of economic accommodation
For the largest number of citizens , getting out of a debt/credit economy is the first form
, with little economic growth , the future will not pay for the present anymore

It might seems a small thing but it is truly huge , it's a civilization tipping point
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Re: The Cheap Oil Tipping Point

Unread postby evilgenius » Sun 13 Nov 2011, 13:37:21

$this->bbcode_second_pass_quote('sparky', '.')
the future will not pay for the present anymore


That's a good point. I don't know if this is what you mean, but when uncertainty is as high as it is right now that is correct - at least for the broad spectrum of us. Usually when times like these resolve themselves some person or other emerges to talk about how they invested accordingly. How they saw incredible opportunity in crisis and took advantage of the risk/return to cash in. The problem is that the outcomes of these things are unpredictable and in a real sense almost random. What is really going on is that a whole bunch of someone's have done likewise, betting on each their own vision of the eventual outcome. They all think they are going to be like J. Paul Getty, seeing that oil was cheaper to buy in the stock market than to wildcat out of the ground. Somebody has to be right, don't they? Are you trying to say that nobody will? That is possible, I will admit. It would have to be a function, however, of a major ethical failure on the part of those who govern and a very real loss of faith on the part of the rest of us, which can happen even beyond the levels we are seeing now.
When it comes down to it, the people will always shout, "Free Barabbas." They love Barabbas. He's one of them. He has the same dreams. He does what they wish they could do. That other guy is more removed, more inscrutable. He makes them think. "Crucify him."
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Re: The Cheap Oil Tipping Point

Unread postby The Practician » Sun 13 Nov 2011, 15:13:45

$this->bbcode_second_pass_quote('evilgenius', '')$this->bbcode_second_pass_quote('sparky', '.')
the future will not pay for the present anymore


That's a good point. I don't know if this is what you mean, but when uncertainty is as high as it is right now that is correct - at least for the broad spectrum of us. Usually when times like these resolve themselves some person or other emerges to talk about how they invested accordingly. How they saw incredible opportunity in crisis and took advantage of the risk/return to cash in. The problem is that the outcomes of these things are unpredictable and in a real sense almost random. What is really going on is that a whole bunch of someone's have done likewise, betting on each their own vision of the eventual outcome. They all think they are going to be like J. Paul Getty, seeing that oil was cheaper to buy in the stock market than to wildcat out of the ground. Somebody has to be right, don't they? Are you trying to say that nobody will? That is possible, I will admit. It would have to be a function, however, of a major ethical failure on the part of those who govern and a very real loss of faith on the part of the rest of us, which can happen even beyond the levels we are seeing now.


I think It means that we've finally reached the point where it doesn't matter how many billions or trillions in paper money we try and borrow from the future, it's not going to lead to economic growth. That's because it's not about money, its about energy, and the cosmos doesn't take credit.

Humans have gained access to exothermic energy in greater and greater amounts though the process of leverage. The physical kind, not the financial kind. High EROEI Crude that comes out of the ground under its own pressure is the biggest lever we've managed to get our hands on so far, but we didn't use it particularly wisely. We basically used the leverage of crude to "lift" a system of energy consumption that can only be supported by a lever of increasing or at the very least equal size. Right now, as we struggle along the "bumpy plateau" of production, with no prospects of being able to physically increase the size of our lever. For whatever reason, we are still idiotically trying to "grow" the system that's perched precariously at the end of it. To do this, we are essentially cannibalizing the lever, and at some point it just isn't going to be enough to keep the system up. We will have reached the tipping point.
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Re: The Cheap Oil Tipping Point

Unread postby babystrangeloop » Sun 13 Nov 2011, 16:18:23

blip
Last edited by babystrangeloop on Sun 13 Nov 2011, 17:16:59, edited 1 time in total.
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Re: The Cheap Oil Tipping Point

Unread postby babystrangeloop » Sun 13 Nov 2011, 17:17:16

$this->bbcode_second_pass_quote('', '[')b]Heating Fuel at Record as European Diesel Surges: Energy Markets
By Lananh Nguyen / Bloomberg / November 4, 2011

European consumers will probably pay the most ever to run diesel cars and heat their homes this year, at a time when unemployment is at the highest in more than a decade and economic confidence is falling.

Diesel at the pump in 27 nations averaged 1.361 euro a liter ($7.22 a gallon) so far in 2011, up 6 percent from the record year of 2008 ...

but of course it's only due to some local effects and temporary situations. There is no ongoing trend involved.
$this->bbcode_second_pass_quote('', '.').. Energy users are paying more because refiners halted plants for maintenance and slowed production in response to falling profit margins over the last two months. ...

I'm sure in another week or two things will be just peachy again once they fix those minor, transient issues, right?

Meanwhile in China:
$this->bbcode_second_pass_quote('', '[')b]China PMI in surprise fall, lowest since 2009
By Zhou Xin and Nick Edwards; Additional reporting by Aileen Wang; Editing by Ken Wills and Neil Fullick / Reuters / November 1, 2011

China's official purchasing managers' index (PMI) fell to 50.4 in October from 51.2 in September, countering expectations for a rise. ...

What could possible be an obstacle to their endless growth?

Image

Can't they simply pay more for coal? They aren't deadbeats, are they?
$this->bbcode_second_pass_quote('', '[')b]PLATTS COAL ANALYSIS: Elusive China demand erodes support for Newcastle thermal coal prices
Platts / November 11, 2011

There was another sizeable drop in physical Newcastle thermal coal prices in the week to November 11 as buying by Chinese power utilities again failed to materialize.

Spot prices broke through the resistance level of $120/mt FOB Newcastle in the week ended October 21, testing the $115/mt FOB price level in the first week of November. ...

Tell them to buy the coal on credit so we can all continue to have our cheap goods.
$this->bbcode_second_pass_quote('', '[')b]Aluminum Slump Means 25% of Smelters Losing Money: Commodities
By Maria Kolesnikova, Sungwoo Park and Jesse Riseborough / Bloomberg November 9, 2011

... Producers are also contending with rising energy prices, which account for 30 percent to 40 percent of smelting costs, according to Brook Hunt, a London-based research unit of Wood Mackenzie. ...

... Aluminum Corp. of China Ltd. said in October that prices are close to output costs. ...
Can't they cut back on feeding their workers some more to make up for the thinning margins? It worked for Jonathan Swift.
$this->bbcode_second_pass_quote('', '[')b]China may live with power shortages this winter
Xinhua / November 9, 2011

Some parts of central and south China are facing power cuts and electricity rationing as soaring coal prices discourage power plants from producing at full capacity ...
Big deal, they just need to learn to run their factories without electricity.
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