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Book: "Oil Panic and the Global Crisis" by Steven Gorelick

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Re: New Book: "Oil Panic and the Global Crisis"

Unread postby Carlhole » Thu 02 Dec 2010, 20:13:26

$this->bbcode_second_pass_quote('Xenophobe', 'A')s far as the 1970's peak....we have already reversed a Hubbertian decline, and provided another peak of natural gas in the US some 4 decades after the Hubbert declared peak.


Gorelick really digs into the history and mathematical inadequacy of Hubbert's approach. It's well known that Hubbert had to assume a given quantity of oil before any of his subsequent analysis could be relevant at all. Hubbert had to continually revise his total oil endowment estimates upwards to make anything else in his method work - just as Colin Campbell also has. It's the main flaw in this line of reasoning.

Campbell likes to make the analysis of Guiness in a beer glass. The glass is full at first but soon is ultimately consumed. But calculating future production of oil, which has so many complex factors affecting it, is not so simple.

It's one thing to recognize that oil is finite; quite another to calculate how much there is and how long it will last. So many other economic and technological factors such as substitution, innovation and adaptation go into that calculation, factors that affect future production in ways that no one in the present can possibly quantify. One of the best explications of Hubbert's method came from Ken Deffeyes in Hubbert's Peak, which was also a compelling read, at least for me at the time (1999). But the flaw in Hubbert's approach was still alive and kicking in Deffeyes 5 decades after Hubbert's Shell Oil presentation. Such a flaw is not obvious to the gentle reader, newly exposed to this stuff.

In fact, I hope Ken Deffeyes does write something about Gorelick's Oil Panic and the Global Crisis: Predictions and Myths; being a former university professor, geologist, mathmetician, petroleum expert, and former student and colleague of M.King Hubbert himself, Deffeyes would be the natural one to respond to Gorelick's treatment of the peak oil debate in its entirety - especially since most who read Oil Panic can see that Hubbert approach is not quite all there.

I believe Hubbert was making a rational, scientifically earnest attempt in 1956 to grapple with future energy use, future oil depletion - and to point towards our probable nuclear energy future - all very mainstream stuff for the 50's and its visions of what lay ahead. But his approach just seems like some form of quasi-mathematical divination to me now.

As Stephen Gorelick said, the peak oil community, which really depends upon the mathematics, has been quite subdued in its response to his book. I don't think its one you can easily toss off as hogwash, particularly since the reader is allowed to draw his/her own conclusions after reading both sides of the argument (I like that form of presentation; it is sensible and a lot harder to attack).
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Re: Oil Panic and the Global Crisis – Predictions and Myths

Unread postby americandream » Thu 03 Mar 2011, 05:39:42

$this->bbcode_second_pass_quote('Pops', '')$this->bbcode_second_pass_quote('', 'T')he world may very well go through a peak in oil use, but a peak and decline is far more likely to reflect a decrease in oil demand rather than production choked by perilously low global availability of oil.

Man, ya just gotta shake your head dontcha.

Maybe he's right, maybe drought didn't do in the Anasazi maybe they just experienced a peak and decline in demand for water!
Same with the ever lovin Easter egg islanders, the demand for canoes and so trees just crashed!


Image<snort>


Incredible! Does he realise that our way of life is rapidly expanding into the remaining 5 billion who previously got around on foot, bikes, donkeys, horses, carts, etc? Maybe it's all a dream and there are just us one billion Westerners on this planet.
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Re: Oil Panic and the Global Crisis – Predictions and Myths

Unread postby Carlhole » Thu 03 Mar 2011, 09:18:25

There is already thread here.

Download it here free

$this->bbcode_second_pass_quote('', 'I')ncredible! Does he realise that our way of life is rapidly expanding into the remaining 5 billion who previously got around on foot, bikes, donkeys, horses, carts, etc?


There is a whole section on Malthusians.

It's the best total treatment of the peak oil debate that I have seen so far. Very well researched and written using only the best sources of facts and data on either side.

If I were a staunch doomer, I would not have been displeased at all with the author's treatment of Hubbert's approach to divining the future of oil. Peak Oil Theory was all there in all its forboding glory.

The main value of this book is that it expresses BOTH sides of the peak oil debate completely and concisely for comparison by readers. No one else has done this. I'm surprised that no one has written a review of it at ASPO or ODAC. I suppose they will have trouble criticizing it because the author allows the facts and data to do the persuading. However, as the reader discovers (or re-discovers) more facts and data in the second section (the anti-peak oil section), it becomes clear that there won't be any peak oil apocalypse -- maybe trials and tribulations over global energy availability as the transition to other sources progresses, but no apocalypse.
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Re: Oil Panic and the Global Crisis – Predictions and Myths

Unread postby Beery » Thu 03 Mar 2011, 10:10:11

$this->bbcode_second_pass_quote('Pops', 'M')aybe he's right, maybe drought didn't do in the Anasazi maybe they just experienced a peak and decline in demand for water!


:lol:

And I bet there were a bunch of people saying: "Peak water? No way! As long as demand is strong, enough rain will fall to meet it".
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Re: New Book: "Oil Panic and the Global Crisis"

Unread postby kublikhan » Fri 18 Nov 2011, 22:14:32

Saw Carl promoting this book in another thread so I downloaded the free copy and gave it a read. If anyone wants to read it, I would recommend skipping the sections on bell curves unless you want to be bored to tears. About some of the counter peak oil arguments, I had a few issues with some of them I want to bring up.

Argument 1:
$this->bbcode_second_pass_quote('', 'I')f a commodity is becoming scarce, then one would expect the inflation adjusted price to increase. Is the increasing price trend from 2002 to 2008 a reflection of oil scarcity? The price of oil indeed climbed to an historically high level in 2008, but, given the fluctuations in the inflation adjusted price, it is difficult to claim oil scarcity based on the high 2008 prices alone. Historical spikes in the price of oil were not because the world was running out of oil. However, considering inflation, it isn’t true to say that the real price of oil has generally increased.


Argument 2:
$this->bbcode_second_pass_quote('', 'G')lobally, as the inflation - adjusted price of oil increased over the two past decades, reserves increased significantly.

There are two insights that have been derived from discovery trends in recent years. First, more global offshore oil production is likely in the future. Major offshore discoveries and production are likely only if oil prices are high enough to justify exploration and development by companies and countries. From the 1960s through the 1980s, about one - third of giant fields were discovered offshore. The fraction rose in the 1990s and, since 2000, seven in ten new giant fields have been found offshore. Why has there been such a dramatic decline in oil discoveries during the past 20 years? The first reason is obvious: depending on your definition of “easy,” much of the “easy” oil has already been found. Finding oil and ultimately bringing it to market requires enormous investments. With the higher price of oil and greater exploration, the number of global discoveries of giant oil fields climbed from 1 in 2006 to 11 in 2008.


Is it just me, or do these two arguments not belong together? One is arguing the inflation adjusted price of oil has NOT been going up. The other is arguing the inflation adjusted price of oil has been going up. They can't both be true at the same time. Either oil prices are trending up or they are not. To me, it seems obvious that the second argument is the correct one. Even though prices fell hard in 09, it did not last long and prices are back to $100 levels. This looks to me more like an upwards trend than a short term spike. And if the price of oil does tank hard and stay low, then that would undermine the second argument. Expensive oil production will not be able to continue for long with oil prices below production costs.

$this->bbcode_second_pass_quote('', 'R')ecession was sparked in the 1970s when the (nominal) price of oil more than tripled in one year, going from $3.29 to $11.58 per barrel from 1973 to 1974. In inflation - adjusted terms, the price increased fivefold during the period 1973 to 1980 (from $15 to $93 per barrel (2007$)). Recessionary pressures diminished only when the price of oil dropped during the 1980s, falling by nearly half from 1985 to 1986 ($27.56 to $14.43 per barrel).

A major fear about the future is that the world cannot afford higher oil prices. This concern is based on the fallacy that the world is actually spending relatively more and more money on oil. Should oil prices return to their 2008 high levels and mimic the historical levels of the early 1980s, will the world economy be driven down further?
Viewed in historical context, global expenditures on oil in the past dozen years were not the highest ever. Rather, the 12 - year period from 1974 to 1985 saw the most expensive oil in history. During that period, the world spent $15.4 trillion (2007$) on oil. In the more recent 12 - year period (1997 to 2008), global expenditures were $13.7 trillion (2007$). In other words, the world spent more on oil during the last major oil crisis than during the period before 2009 when oil prices increased significantly. What is even more significant is that oil has become a smaller cost - component of the global economy than it used to be. As a fraction of the average gross world product, over two times more money was spent on oil during 1974 to 1985 than during 1997 to 2008. During both of these periods, the price of oil increased rapidly. The average GWP was $21 trillion (2007$) during the former period and doubled to an average of $42 trillion (2007$) during the latter one, and yet the world spent 12 percent less on oil from one period to the next (Figures 4.52 and 4.53). In 1980, the cost of oil was twice the percentage of the world economy compared to the relative cost of oil in 2008. Oil expenditures in 1980 were 9.4 percent of US GDP, while in 2008 oil was “ only ” 5.0 percent of US GDP.
This may be true enough. But every time the oil expense indicator has risen above 5%, it triggered a recession. Thus even if it is true that we spent more on oil in 1980 than 2008 as a percentage of GDP, the early 80's world recession did not end until the oil expense indicator dropped below 3% around 85-86. That would seem to indicate that the oil expense indicator is still in dangerous territory today and there is legitimate concern about high oil prices dragging the economy into another recession. Here is another article on the same topic:

$this->bbcode_second_pass_quote('', 'U')sing the oil expense indicator, economists say Brent crude, the international oil benchmark, would need to be in the low $90s per barrel to be under the 4.5 percent danger mark.

If history is any guide, another oil-induced recession may be just around the corner, at least for the United States and some of the other developed economies. Every time that the cost of oil relative to global economic output has hit current levels -- and that's even after sharp falls in spot prices this month -- it has heralded a slump.

And while economists and analysts say a serious slowdown can still be avoided, many add that unless oil and energy prices fall much further and -- most important -- stay down, the world economy could be in serious trouble. "We are in a danger area for the world economy," said Christophe Barret, global oil analyst at Credit Agricole.

The warning signal flashing is what economists call the "oil expense indicator": the share of oil expenses as a proportion of worldwide gross domestic product (GDP) (oil prices times oil consumption divided by world GDP). Since 1965, this has averaged roughly 3 percent of GDP, and it has only exceeded 4.5 percent during three periods: in 1974, between 1979 and 1985 and in 2008. Each period has seen severe global recessions.

Analysts differ on exactly how high oil prices need to be and how long they need to stay up before they slow growth. But most economists argue there is a level at which fuel input costs become incompatible with continuing economic growth.
Recession risk unless oil prices fall further
The oil barrel is half-full.
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Re: New Book: "Oil Panic and the Global Crisis"

Unread postby Outcast_Searcher » Sat 19 Nov 2011, 02:49:30

$this->bbcode_second_pass_quote('Keith_McClary', '
')Math does not necessarily mean explicit equations. You don't need to write explicit equations to show that a rock thrown up will fall down.

Actually you do, unless you want to only talk about one case (the Earth's surface) and describe things in a very general way that's not particularly useful to solve specific problems.

Physics is applied math, filled with equations. That was the brilliance of Newton, using such equations (including the Calculus which he invented (or co-invented)) to specifically describe such behavior of objects in motion in a predictable way. Newtonian physics was good enough to use for the space program's missions, including the moon shots.

Just ignoring this type of discipline, IMO, does nothing to bolster the peak oil hypothesis.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: New Book: "Oil Panic and the Global Crisis"

Unread postby Schadenfreude » Sat 19 Nov 2011, 18:14:50

U.S. oil and gas yield will beat peak by 2020, research projects

$this->bbcode_second_pass_quote('', 'T')he United States is on track to beat its previous peak production of oil, natural gas and natural gas liquids, according to an analysis by consulting firm PFC Energy.

The analysis projects that the United States will become the world’s top producer of those fossil fuels by 2020. Though Saudi Arabia will continue surpass it in oil production, the United States’ booming shale gas business will make it the global leader in well-borne fossil fuels, according to PFC Energy.

Domestic energy production has declined since the early 1970s, when the United States peaked at about 22 million barrels of oil, natural gas and natural gas liquids per year, the analysis noted. About 45 percent of the product was oil and 43 percent was natural gas.

The United States is poised to hit 22 million barrels of oil equivalent again in 2020. But natural gas will make up the majority of energy produced – about 58 percent, according to PFC Energy.

In September Bentek Energy predicted that combined Canadian and U.S. oil production would reach an all-time high by 2016.

The analysis attributes most of the growth in natural gas to shale formations in Texas, Louisiana and the Northeast. Technology improvements, including hydraulic fracturing, have allowed energy companies to access oil and natural gas from shale rock that was once too complex to access economically.

Shale will also increase production of oil and natural gas liquids, the report noted. PFC Energy projects that by 2020, more U.S.-produced oil and liquids will come from shale than from the Gulf of Mexico.
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Re: New Book: "Oil Panic and the Global Crisis"

Unread postby Cloud9 » Sat 19 Nov 2011, 19:01:22

These guys are looking for investors.
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Re: New Book: "Oil Panic and the Global Crisis"

Unread postby Schadenfreude » Sat 19 Nov 2011, 19:49:13

$this->bbcode_second_pass_quote('Cloud9', 'T')hese guys are looking for investors.


PFC Energy was quoted in these forums by a whole lot of people when the price was rising in 2008. No one complained about PFC Energy then. Same firm.
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Re: New Book: "Oil Panic and the Global Crisis"

Unread postby Schadenfreude » Sat 19 Nov 2011, 20:10:48

$this->bbcode_second_pass_quote('', 'U')pstream and Gas Consulting: Overview

PFC Energy’s upstream and gas consulting team provides creative business solutions to complex energy sector challenges. We cover the full range of upstream issues from country and basin opportunities to positioning and partnering, competitive analysis, performance benchmarking and asset valuations.

Upstream and Gas Consulting: Overview

What makes PFC Energy different?
  • Energy specialists: We have focused exclusively on the energy sector for 27 years. Our professionals have first-hand experience in the sector.
  • Proprietary knowledge base: We maintain a large base of models, databases and other analytical material that covers all phases of the value chain and the assets and activities of all the key countries and companies.
  • Independent, objective and transparent: We tell you what we think and explain why.


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Re: New Book: "Oil Panic and the Global Crisis"

Unread postby Cloud9 » Sun 20 Nov 2011, 09:42:57

We have been here before. http://news.bbc.co.uk/hi/english/static ... line/2.stm
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