General discussions of the systemic, societal and civilisational effects of depletion.
by dsula » Fri 28 Jun 2013, 11:09:54
$this->bbcode_second_pass_quote('John_A', '')$this->bbcode_second_pass_quote('dsula', '
')Luckly there's a mathematical equation for it.
amount_of_oil = lim f(money), for money going towards infinity.
One only needs to solve the equation to get the answer.
Unfortunately, there is a limited amount of oil in the ground,
I'd say "fortunately" not "unfortunately".
But if it's true what your saying, and there is actually a LIMITED amount of oil in the ground, that means that my equation:
amount_of_oil = lim f(money), for money towards infinity, will result in amount_of_oil < infinity.
You know what that means, right? It means that even if we're willing to pay an UNLIMITED amount of money for oil, there will only be a LIMITED amount to get.
Hmm. That is strange. Because economics teach that once the price rises, supply will become available. Always! Without exception! That's economics. I'm wondering what is right. Trusted old math, or social science "economics".
$this->bbcode_second_pass_quote('', '
')But economics sure seems to be working in terms of conservation, price limits as substitution kicks in, the growth of use and dropping price of alternatives.
So that means this peak oil is really here (give or take a few 10s of years, in the grand scale of things it doesn't matter that much). Or otherwise pesky old economics wouldn't try to chicken away from math and go for substitution.
I first believed you when you said that PO is a non-event. But now that you're saying oil is LIMITED, I can see that in fact it is an event. It's the local maxima of oil production in the interval of 1900AD to 2100AD. Quite the event. (It's probably a bigger event, than when obama got elected. That was quite a non-event).
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by John_A » Fri 28 Jun 2013, 12:36:34
$this->bbcode_second_pass_quote('dsula', '
')You know what that means, right? It means that even if we're willing to pay an UNLIMITED amount of money for oil, there will only be a LIMITED amount to get.
Hmm. That is strange. Because economics teach that once the price rises, supply will become available. Always! Without exception! That's economics. I'm wondering what is right. Trusted old math, or social science "economics".
I already mentioned that economics has been working pretty darn good when you aren't testing the limits of mathematical equations which just don't work in the real world. Which is why economics was invented probably, math just doesn't work so well on predicting human behavior or actions, but economics can do a pretty bang up job! Certainly on the topic of ever increasing reserves in a high price environment, it has been spot on! Go economics!
$this->bbcode_second_pass_quote('dsula', '
')$this->bbcode_second_pass_quote('', '
')But economics sure seems to be working in terms of conservation, price limits as substitution kicks in, the growth of use and dropping price of alternatives.
So that means this peak oil is really here (give or take a few 10s of years, in the grand scale of things it doesn't matter that much). Or otherwise pesky old economics wouldn't try to chicken away from math and go for substitution.
Economics has no need to chicken away at this point. With some trillions of barrels of crude in the ground, and trillions of barrels of manufactured crude available from other things, we have quite a few 10's before any limits to mathematical equations which don't describe the behavior of people matter in the least. Which is good! Both for graduating economists who would rather not become math majors to explain human behavior and people wanting to collect the best paying 4 year college degree in the US!
$this->bbcode_second_pass_quote('dsula', '
')I first believed you when you said that PO is a non-event. But now that you're saying oil is LIMITED, I can see that in fact it is an event. It's the local maxima of oil production in the interval of 1900AD to 2100AD. Quite the event. (It's probably a bigger event, than when obama got elected. That was quite a non-event).
Peak oil is certainly an event! But we have to discuss significance I imagine, both within the context of economics and Rockmans POD to really determine who, how hard, and how many it will really be meaningful to. Certainly if it is just another cause of general inflation, that relegates its significance to...not much. But given a few 10's of years or more....maybe...depending on how well economics works when it comes to all the other things being done to make it even less significant.
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by ROCKMAN » Fri 28 Jun 2013, 15:08:28
John - I've never seen turbines that close to the round. Where are they?
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by dolanbaker » Fri 28 Jun 2013, 17:19:02
$this->bbcode_second_pass_quote('ROCKMAN', 'J')ohn - I've never seen turbines that close to the round. Where are they?
Maybe they're a European design build by an American company that didn't realize the units were metres and not feet!
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by dcoyne78 » Fri 28 Jun 2013, 19:36:02
Reserves have only increased since 2010 because Canadian oil sands and Orinoco belt extra heavy are now being booked as reserves, in 2010 they were not counted.
As pointed out upthread these reserves (the extra heavy and bitumen) cannot be produced very quickly. It is the rate of flow of oil or how many barrels can be produced per day that matters along with the price of oil that returns a profit to the producers.
One could argue that the inevitable oil price rise that will be required to keep the oil flowing at current rates or higher may lead to switching to other fuels and to other types of transportation (trains, electric, and hybrid cars). The transition may not happen smoothly.
It is not about reserves, it is about output and price.
DC
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by ralfy » Fri 28 Jun 2013, 23:58:15
$this->bbcode_second_pass_quote('John_A', '
')
They can also always go down. Matter of fact, they are DESIGNED to go down, in lockstep with consumption. But apparently the recent price increases have dipped deeper into the resource pyramid and then...well....suddenly you have more. Crazy how that works, but then the oil field has never been that easy to understand, jargon here and there probabilistic estimates of things you can't see or feel until you spend millions to get.
It's the other way round: "in lockstep with consumption," "they are DESIGNED to go" up.
$this->bbcode_second_pass_quote('', '
')
Argues might be the wrong verb. Maybe they know, them having more money than most, and a good motivation to understand their business far better then others. Certainly this new oil keeps coming from somewhere, the claims of journalists who might not know anything about the industry aside.
There's no need to "know" as that's a fact. The catch is rate of flow.
$this->bbcode_second_pass_quote('', '
')
What catch? That article was written claiming cost was a problem and then...prices came down. Hard to argue then that the demand isn't being filled and even worse, at a lower price. Or was that your point, that demand drove additional supply at greater rates than was needed, and the long term effect is generally lower prices?
Prices did not go down.
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by John_A » Sat 29 Jun 2013, 00:13:07
$this->bbcode_second_pass_quote('ROCKMAN', 'J')ohn - I've never seen turbines that close to the round. Where are they?
Sierra Nevada somewhere? I've seen the small ones all over the hills near Mohave, but not this exact type before.
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by John_A » Sat 29 Jun 2013, 00:19:46
$this->bbcode_second_pass_quote('dcoyne78', 'R')eserves have only increased since 2010 because Canadian oil sands and Orinoco belt extra heavy are now being booked as reserves, in 2010 they were not counted.
That is just about as bad news as the Japanese making reasonable production rates from seafloor hydrates. If the Orinoco and tar sands can now book tens or hundreds of billions of barrels as reserves (thereby establishing themselves economic at current prices) then in another few years when prices are higher, say $150 on average, more hundreds of billions will become available.
$this->bbcode_second_pass_quote('dcoyne78', '
')As pointed out upthread these reserves (the extra heavy and bitumen) cannot be produced very quickly. It is the rate of flow of oil or how many barrels can be produced per day that matters along with the price of oil that returns a profit to the producers.
As anyone familiar with capital intensive projects in huge resources will tell you, the rate at which these things can be produced is completely dependent on how much you are willing to spend, because certainly mining operations are not reservoir pressure dependent. And as we have learned from both shale oil and gas drilling, if you are willing to spend, the oil and gas will arrive and create the fastest growing oil producing country on the planet...America.
So Canada and Venezuela can do the same? Or better? For longer?
$this->bbcode_second_pass_quote('dcoyne78', '
')One could argue that the inevitable oil price rise that will be required to keep the oil flowing at current rates or higher may lead to switching to other fuels and to other types of transportation (trains, electric, and hybrid cars). The transition may not happen smoothly.
It is not about reserves, it is about output and price.
DC
Reserves are the inventory of shoes, output is the number of cashiers you have to check people out who purchase them, and the price determines how many cashiers you need. They all matter, and right now, the world has plenty of inventory, and can hire more cashiers if consumers are willing to pay the price being asked. Oil isn't any different except the inventory is finite. And currently really, really big.
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by John_A » Sat 29 Jun 2013, 00:36:55
$this->bbcode_second_pass_quote('ralfy', '')$this->bbcode_second_pass_quote('John_A', '
')
They can also always go down. Matter of fact, they are DESIGNED to go down, in lockstep with consumption. But apparently the recent price increases have dipped deeper into the resource pyramid and then...well....suddenly you have more. Crazy how that works, but then the oil field has never been that easy to understand, jargon here and there probabilistic estimates of things you can't see or feel until you spend millions to get.
It's the other way round: "in lockstep with consumption," "they are DESIGNED to go" up.
You are incorrect. Reserves, upon consumption, are taken off the books and thereby reduce the amount of "reserves", if nothing else changes. But what is changing is as fast as reserves are converted to consumption, resources are converted to reserves at an even higher rate. That is what has happened from 2010 to now. Unlike the claim of the original author.
$this->bbcode_second_pass_quote('ralfy', '
')$this->bbcode_second_pass_quote('', '
')
Argues might be the wrong verb. Maybe they know, them having more money than most, and a good motivation to understand their business far better then others. Certainly this new oil keeps coming from somewhere, the claims of journalists who might not know anything about the industry aside.
There's no need to "know" as that's a fact. The catch is rate of flow.
This isn't about catching, this is about economics. If you want to increase oil flow by 10 million barrels a day I can tell you EXACTLY how to do it, and then I will tell you the price. You can choose to take the 10mbd at that price, or not, but if there weren't geopolitical issues in the way, flow is dependent on nothing more than what someone is willing to pay and how much they want.
Apparently the world has wanted 75-90 mbd as of late (and depending on how many definitions of oil you wish to employ in tallying the total) and is willing to pay around $100 for it.
No catch in here anywhere, just Rockman's POD and basic supply and demand.
Hence:
$this->bbcode_second_pass_quote('ralfy', '
')$this->bbcode_second_pass_quote('', '
')
What catch? That article was written claiming cost was a problem and then...prices came down. Hard to argue then that the demand isn't being filled and even worse, at a lower price. Or was that your point, that demand drove additional supply at greater rates than was needed, and the long term effect is generally lower prices?
Prices did not go down.
Your article proclaiming "RUNNING DRY" in the title comes from June/2011. Today is June/2013.
June 2011 Brent was $113. Monthly average for May 2013 was $103. Bet your butt price came down, and guess what else? We haven't been running dry either. And supply has kept up with demand in the worlds largest consumer and waster of fuel, so I have more news, the article was wrong bigtime. Run on down to your local distributor and buy a tanker truck worth of gasoline if you'd like, they'll sell it to you no problem.
Your reference was incorrect. The original Reuters article was incorrect. Reserves aren't declining. They might sometime, but it ain't happened yet.
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by ralfy » Sat 29 Jun 2013, 04:28:13
$this->bbcode_second_pass_quote('John_A', '
')You are incorrect. Reserves, upon consumption, are taken off the books and thereby reduce the amount of "reserves", if nothing else changes. But what is changing is as fast as reserves are converted to consumption, resources are converted to reserves at an even higher rate. That is what has happened from 2010 to now. Unlike the claim of the original author.
Reserves are not usually calculated "upon consumption" but on what is estimated to be available.When they are "converted to consumption," then that's the rate of production, which is not "changing...as fast."
How, then, are resources "converted to reserves at an even higher rate"? By ignoring the energy costs of producing those reserves.
That's why oil reserves aren't declining. What is declining is what can be produced from those reserves.
$this->bbcode_second_pass_quote('', '
')
This isn't about catching, this is about economics. If you want to increase oil flow by 10 million barrels a day I can tell you EXACTLY how to do it, and then I will tell you the price. You can choose to take the 10mbd at that price, or not, but if there weren't geopolitical issues in the way, flow is dependent on nothing more than what someone is willing to pay and how much they want.
It's the other way round: this is not about economics but about physical limitations. If you want to increase oil flow by 10 Mb/d, then you need to find oil that is easy to access. If that's not available, then you won't get it no matter what price you set.
That's why oil price has gone up by up to three times but conventional production has not been able to catch up. Meanwhile, oil consumption from the rest of the world has been outstripping consumption decline for the U.S., the EU, and Japan.
In the end, there are lots of people willing to pay for higher prices, but conventional production has not been able to increase to meet that demand. Why's that? Because of all things credit is the easiest thing to create. In fact, we now have over a quadrillion dollars of that in notional value:
http://www.washingtonsblog.com/2012/05/ ... arket.html$this->bbcode_second_pass_quote('', '
')
Apparently the world has wanted 75-90 mbd as of late (and depending on how many definitions of oil you wish to employ in tallying the total) and is willing to pay around $100 for it.
Exactly my point:
http://www.economist.com/blogs/dailycha ... onsumptionThus, oil prices going up but conventional production unable to meet increasing demand.
$this->bbcode_second_pass_quote('', '
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No catch in here anywhere, just Rockman's POD and basic supply and demand.
Hence:
Actually, POD works against "basic supply and demand." That's why you have increasing oil price coupled with increasing demand, but conventional production has not been able to catch up. Meanwhile, oil production cost has started to go up.
Looking at this in terms of economics and "basics" is a waste of time.
$this->bbcode_second_pass_quote('', '
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Your article proclaiming "RUNNING DRY" in the title comes from June/2011. Today is June/2013.
June 2011 Brent was $113. Monthly average for May 2013 was $103. Bet your butt price came down, and guess what else? We haven't been running dry either. And supply has kept up with demand in the worlds largest consumer and waster of fuel, so I have more news, the article was wrong bigtime. Run on down to your local distributor and buy a tanker truck worth of gasoline if you'd like, they'll sell it to you no problem.
Your reference was incorrect. The original Reuters article was incorrect. Reserves aren't declining. They might sometime, but it ain't happened yet.
Those who argued that peak oil would not take place insisted that by now conventional oil production would breach 100 Mb/d and that the price of oil would drop to less than $30 a barrel. Even the Saudis boasted that by 2011 they'd reach 15 Mb/d easily.
Oil prices did not go down. Not even close.
Thus, my "reference" is correct. As you put it, reserves "aren't declining," but the energy costs of extracting from those reserves are not equal. As oil is deeper or requires more processing then energy costs will be higher.
Your reference to economics, "basic supply and demand," and arguing that anything can be obtainable as long as there are enough dollars for it are worthless, as we have a large global money supply, and credit can be created easily. And yet physical limitations remain.
That's why oil prices did not go down, conventional production hasn't been able to meet increasing demand, and demand is still increasing even with higher oil prices.
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by John_A » Sat 29 Jun 2013, 13:08:39
$this->bbcode_second_pass_quote('ralfy', '
')How, then, are resources "converted to reserves at an even higher rate"? By ignoring the energy costs of producing those reserves.
All costs are included when calculating reserves, it is what makes them reserves. The gasoline or electricity used to run the pumpjack, the gasoline used to get the welltender to the well, the diesel used in the workover rig, all those costs are factored into proven reserves, as well as estimates of PDNPs or PUDs. It is required. I believe Rockman has mentioned this before.
$this->bbcode_second_pass_quote('ralfy', '
')If you want to increase oil flow by 10 Mb/d, then you need to find oil that is easy to access. If that's not available, then you won't get it no matter what price you set.
Ease of access is irrelevant given a high enough price, as long as the resource is of sufficient size. The IEA has shown that we have plenty of resources. See provided supply/demand curve for how this works, see IEA for the trillions of barrels of things we can make into gasoline and diesel fuel.
$this->bbcode_second_pass_quote('ralfy', ' ')
That's why oil price has gone up by up to three times but conventional production has not been able to catch up. Meanwhile, oil consumption from the rest of the world has been outstripping consumption decline for the U.S., the EU, and Japan.
No one is talking about only conventional production. What consumers want is gasoline, diesel and jet fuel. They do not care if it is manufactured from conventional crude, heavy oil, hydrates or marshmallows. Shortages are the evidence of consumption outstripping supply. I have already mentioned that even in the world's largest waster of crude oil, there are no such shortages.
$this->bbcode_second_pass_quote('ralfy', ' ')
In the end, there are lots of people willing to pay for higher prices, but conventional production has not been able to increase to meet that demand. Why's that? Because of all things credit is the easiest thing to create. In fact, we now have over a quadrillion dollars of that in notional value:
Fortunately this topic is about declining oil reserves and not which ponzi scheme is worse than the other. And someone's favorite ponzi scheme does not change the fact that world reserves haven't declined in the past 3 years.
$this->bbcode_second_pass_quote('ralfy', '
')Thus, oil prices going up but conventional production unable to meet increasing demand.
Conventional production is not what is being demanded. Gasoline, diesel, jet fuel, and asphalt are.
$this->bbcode_second_pass_quote('ralfy', '
')Looking at this in terms of economics and "basics" is a waste of time.
Okay. Then we can just look at how well reserves have increased in the face of claims they were decreasing.
$this->bbcode_second_pass_quote('ralfy', '
')Those who argued that peak oil would not take place insisted that by now conventional oil production would breach 100 Mb/d and that the price of oil would drop to less than $30 a barrel. Even the Saudis boasted that by 2011 they'd reach 15 Mb/d easily.
The topic is reserves, not bad predictions by Hubbert or Campbell or Simmons.
$this->bbcode_second_pass_quote('ralfy', '
')Oil prices did not go down. Not even close.
Your article had a date in it. I got the Brent oil price from here for that date and May, 2013. You can have you own conclusions, you do not get to make up your own facts.
http://www.indexmundi.com/commodities/? ... &months=60
$this->bbcode_second_pass_quote('ralfy', '
')That's why oil prices did not go down, conventional production hasn't been able to meet increasing demand, and demand is still increasing even with higher oil prices.
Reference already provided for lower prices from your reference of "running dry" to present. Demand isn't for crude oil, it is for derivative products. And those derivative products are not required by any physical laws to be manufactured from only a favorite chemical feedstock. And they aren't.
And those reserves...they have just kept going up....just like any resource economist might predict with higher prices.....
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by Keith_McClary » Sat 29 Jun 2013, 13:18:58
$this->bbcode_second_pass_quote('dsula', 'Y')ou know what that means, right? It means that even if we're willing to pay an UNLIMITED amount of money for oil, there will only be a LIMITED amount to get.
Hmm. That is strange. Because economics teach that once the price rises, supply will become available. Always! Without exception! That's economics. I'm wondering what is right. Trusted old math, or social science "economics".
This is not a contradiction. Economics does not say HOW MUCH additional supply becomes available for a given price increment.
It says you can always squeeze a bit more out of a finite sponge if the price is high enough.
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by ralfy » Sat 29 Jun 2013, 22:09:51
$this->bbcode_second_pass_quote('John_A', '
')
All costs are included when calculating reserves, it is what makes them reserves. The gasoline or electricity used to run the pumpjack, the gasoline used to get the welltender to the well, the diesel used in the workover rig, all those costs are factored into proven reserves, as well as estimates of PDNPs or PUDs. It is required. I believe Rockman has mentioned this before.
From what I know, those costs are measured in money, and since credit can be created easily, then what is technically and economically recoverable can rise.
$this->bbcode_second_pass_quote('', '
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Ease of access is irrelevant given a high enough price, as long as the resource is of sufficient size. The IEA has shown that we have plenty of resources. See provided supply/demand curve for how this works, see IEA for the trillions of barrels of things we can make into gasoline and diesel fuel.
This proves my previous point. We can increase money supply to the point that even with a "high enough price" consumption will continue rising. But increased money supply won't be able to deal with physical limitations, which is why we are now resorting to non-conventional production, as conventional production cannot catch up with demand.
http://www.economist.com/blogs/dailycha ... onsumption$this->bbcode_second_pass_quote('', '
')
No one is talking about only conventional production. What consumers want is gasoline, diesel and jet fuel. They do not care if it is manufactured from conventional crude, heavy oil, hydrates or marshmallows. Shortages are the evidence of consumption outstripping supply. I have already mentioned that even in the world's largest waster of crude oil, there are no such shortages.
The issue isn't whether or not they "care" about the source of fuel but the energy costs involved in obtaining non-conventional production. That is why at best the IEA forecasts a 9-pct increase in energy production from all oil and gas sources put online for the next two decades:
http://www.youtube.com/watch?v=YK730U0Q4NUbut that only assumes that conventional production will not drop. Meanwhile, oil consumption has to keep rising by around 2 pct a year to maintain economic growth:
http://ourfiniteworld.com/2012/07/18/ho ... dp-growth/$this->bbcode_second_pass_quote('', '
')Fortunately this topic is about declining oil reserves and not which ponzi scheme is worse than the other. And someone's favorite ponzi scheme does not change the fact that world reserves haven't declined in the past 3 years.
Unfortunately, "ease of access" even with "higher oil price" is made possible through increased credit, and that in turn is made possible through the same "ponzi scheme."
$this->bbcode_second_pass_quote('', '
')Conventional production is not what is being demanded. Gasoline, diesel, jet fuel, and asphalt are.
Actually, it is, given energy cost problems for non-conventional production:
http://www.slate.com/articles/health_an ... dance.html
But we have no choice because conventional production can no longer catch up with demand:
http://www.economist.com/blogs/dailycha ... onsumption
$this->bbcode_second_pass_quote('', '
')Okay. Then we can just look at how well reserves have increased in the face of claims they were decreasing.
That's what I've been doing.
$this->bbcode_second_pass_quote('', '
')The topic is reserves, not bad predictions by Hubbert or Campbell or Simmons.
As I said, reserves can keep rising, but what matters is rate of flow. And "bad predictions" about oil prices will be mitigated by a weakened global economy due to financial crisis. And yet oil consumption is rising for the rest of the world:
http://ourfiniteworld.com/2013/04/11/pe ... e-problem/
$this->bbcode_second_pass_quote('', '
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Your article had a date in it. I got the Brent oil price from here for that date and May, 2013. You can have you own conclusions, you do not get to make up your own facts.
http://www.indexmundi.com/commodities/? ... &months=60
Reference already provided for lower prices from your reference of "running dry" to present. Demand isn't for crude oil, it is for derivative products. And those derivative products are not required by any physical laws to be manufactured from only a favorite chemical feedstock. And they aren't.
The chart proves my point: oil prices went from less than $40 to $100 plus.
Derivative productions affected by "physical laws" as well, together with many other goods.
$this->bbcode_second_pass_quote('', '
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And those reserves...they have just kept going up....just like any resource economist might predict with higher prices.....
Exactly, and that's because we've created more money.
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by John_A » Sat 29 Jun 2013, 23:01:25
$this->bbcode_second_pass_quote('ralfy', '
')From what I know, those costs are measured in money, and since credit can be created easily, then what is technically and economically recoverable can rise.
Of course energy costs are measured in money.
$this->bbcode_second_pass_quote('ralfy', '
')But increased money supply won't be able to deal with physical limitations, which is why we are now resorting to non-conventional production, as conventional production cannot catch up with demand.
We have already discussed this. Demand for gasoline, diesel and jet fuel doesn't care where it comes from. It only cares about what it costs, and the IEA has already ballparked what those costs look like for all kinds of chemical feedstock with which to make gasoline, diesel and jet fuel.
$this->bbcode_second_pass_quote('ralfy', '
')$this->bbcode_second_pass_quote('', '
')Fortunately this topic is about declining oil reserves and not which ponzi scheme is worse than the other. And someone's favorite ponzi scheme does not change the fact that world reserves haven't declined in the past 3 years.
Unfortunately, "ease of access" even with "higher oil price" is made possible through increased credit, and that in turn is made possible through the same "ponzi scheme."
Reserves do not increase because of credit availability, they increase because the amount can be recovered economically. If you are unhappy with the relationship of credit to how the world works, and has been working for the last century, fire up a thread about it.
$this->bbcode_second_pass_quote('ralfy', '
')$this->bbcode_second_pass_quote('', '
')Conventional production is not what is being demanded. Gasoline, diesel, jet fuel, and asphalt are.
Actually, it is, given energy cost problems for non-conventional production:
I dare you to put conventional crude oil in the gas tank of your car. Or try and fly a plane on it. Crude oil is a chemical feedstock for a refinery, which then turns it into the products "demanded". And the refineries are already building those same products from Bakken oil, and the consumer is none the wiser as to what they put in their fuel tanks.
$this->bbcode_second_pass_quote('ralfy', '
')$this->bbcode_second_pass_quote('', '
')
Your article had a date in it. I got the Brent oil price from here for that date and May, 2013. You can have you own conclusions, you do not get to make up your own facts.
http://www.indexmundi.com/commodities/? ... &months=60
Reference already provided for lower prices from your reference of "running dry" to present. Demand isn't for crude oil, it is for derivative products. And those derivative products are not required by any physical laws to be manufactured from only a favorite chemical feedstock. And they aren't.
The chart proves my point: oil prices went from less than $40 to $100 plus.
The chart proves you didn't even realize when the article you referenced was written. If you examine just the headline and try and use it to make a point, you will run into these kinds of problems. Tis better to read and actually understand one, than keep a supply around where the headline may be completely counterindicative of the point you are trying to make.
$this->bbcode_second_pass_quote('ralfy', ' ')
$this->bbcode_second_pass_quote('', '
')
And those reserves...they have just kept going up....just like any resource economist might predict with higher prices.....
Exactly, and that's because we've created more money.
I'll take that as acknowledgement that reserves have certainly increased, rather than declined, and thus we agree on the same point and it will save me from having to continue this any farther. Next time I recommend you read your own articles prior to be caught out by them.
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by ralfy » Sun 30 Jun 2013, 01:55:24
$this->bbcode_second_pass_quote('John_A', '
')Of course energy costs are measured in money.
If you do that, then energy can be cheap easily as credit can be created easily. That's why oil consumption kept going up for the rest of the world even as oil prices kept going up. The problem is that conventional oil production didn't increase and had to be replaced with more expensive non-conventional production, which is why prices go up.
Your "basic supply and demand" falls apart.
$this->bbcode_second_pass_quote('', '
')
We have already discussed this. Demand for gasoline, diesel and jet fuel doesn't care where it comes from. It only cares about what it costs, and the IEA has already ballparked what those costs look like for all kinds of chemical feedstock with which to make gasoline, diesel and jet fuel.
That's because money can be created easily. That's why demand didn't care "about what it costs," as oil consumption for the rest of the world kept rising even as oil prices are high.
And what "ballpark" did IEA reveal? Total oil and gas production will only rise by around 9 pct during the next two decades. What's the problem with that? Oil consumption has to rise by around 2 pct to ensure economic growth.
$this->bbcode_second_pass_quote('', '
')
Reserves do not increase because of credit availability, they increase because the amount can be recovered economically. If you are unhappy with the relationship of credit to how the world works, and has been working for the last century, fire up a thread about it.
"Economically" means having enough credit to extract reserves. Increase money supply, and what can be extracted "economically" goes up.
$this->bbcode_second_pass_quote('', '
')I dare you to put conventional crude oil in the gas tank of your car. Or try and fly a plane on it. Crude oil is a chemical feedstock for a refinery, which then turns it into the products "demanded". And the refineries are already building those same products from Bakken oil, and the consumer is none the wiser as to what they put in their fuel tanks.
You don't use the same refineries or employ the same processes for all types of oil.
$this->bbcode_second_pass_quote('', '
')The chart proves you didn't even realize when the article you referenced was written. If you examine just the headline and try and use it to make a point, you will run into these kinds of problems. Tis better to read and actually understand one, than keep a supply around where the headline may be completely counterindicative of the point you are trying to make.
Exactly. That's why I don't look at the headlines only, which is what you've been doing. Look at the two charts carefully and then read the update at the bottom of the two charts.
The point of presenting that article, by the way, is to put to question the claim that high oil prices will lead to higher production to meet demand. That didn't happen, as conventional oil production didn't catch up with demand. That's peak oil.
$this->bbcode_second_pass_quote('', '
')I'll take that as acknowledgement that reserves have certainly increased, rather than declined, and thus we agree on the same point and it will save me from having to continue this any farther. Next time I recommend you read your own articles prior to be caught out by them.
I never argued that reserves didn't increase. In fact, even the Saudis argued years ago that we have an abundance of crude oil, which should make non-conventional production irrelevant.
So why are peak oil deniers obsessed over reserves and insist that what Hubbert and others are doing involve "bad predictions"? Because they cannot differentiate reserves from production rate:
http://www.resilience.org/stories/2013- ... te-of-flow
They believe that as long as there's more than enough money, then those reserves can be extracted easily. Besides, people don't care about where their oil comes from as long as they have money to buy them. And that's exactly what happened:
Money supply went up, making more reserves "economically" recoverable. That means conventional production should have gone up, as claimed by the Saudis boasting of their production reaching 15 Mb/d by 2011 and various pundits arguing in 2005 (see the "Four Corners" documentary on peak oil) that by 2010-2011 oil prices would plummet to less than $30 a barrel and that conventional production would reach more than 100 Mb/d.
But conventional production didn't go up and oil didn't drop to $30 a barrel. Instead, we're now resorting to non-conventional production to meet the gap between production and consumption:
http://www.economist.com/blogs/dailycha ... onsumption
and oil is now at around $100 a barrel:
http://www.indexmundi.com/commodities/? ... months=120
with production costs going up as well:
http://ftalphaville.ft.com/2012/05/02/9 ... 100barrel/
The irony is that increased money supply also led to economic crashes for the U.S., EU, and Japan, as consumption started dropping, and yet the same money supply is leading to increased consumption for the rest of the world:
http://ourfiniteworld.com/2013/04/11/pe ... e-problem/
The results are higher oil and food prices, increased consumption, conventional production that can barely catch up with that consumption, economic crisis for industrialized countries, and physical limitations of non-conventional production:
http://www.slate.com/articles/health_an ... dance.html
even as more reports are released of increased reserves.
So, you see, we did agree on the last part. What I did is show why those reserves increased and showed why they aren't important.
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by dsula » Tue 02 Jul 2013, 07:36:16
$this->bbcode_second_pass_quote('John_A', 'I')f you want to increase oil flow by 10 million barrels a day I can tell you EXACTLY how to do it, and then I will tell you the price.
Are you sure you can do that? I think the limit is when the complete industrial output and all available energy of the world is geared to get oil. How much is that? 10M? 20M? 100M? 1G?
But maybe we get an (un-)lucky break and somebody invents a star-trek type beam that can lift up the oil without the need for digging and drilling and stuff. Then of course we can get a lot more a lot faster, yet above limit still applies.
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by dsula » Tue 02 Jul 2013, 07:39:11
$this->bbcode_second_pass_quote('Keith_McClary', '')$this->bbcode_second_pass_quote('dsula', 'Y')ou know what that means, right? It means that even if we're willing to pay an UNLIMITED amount of money for oil, there will only be a LIMITED amount to get.
Hmm. That is strange. Because economics teach that once the price rises, supply will become available. Always! Without exception! That's economics. I'm wondering what is right. Trusted old math, or social science "economics".
This is not a contradiction. Economics does not say HOW MUCH additional supply becomes available for a given price increment.
It says you can always squeeze a bit more out of a finite sponge if the price is high enough.
Yes, you're correct. It's not a contradiction, unless you hit infinity. But then again, who does?
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by ROCKMAN » Tue 02 Jul 2013, 10:12:43
A little qualification is required. Increased prices can lead to increased production of a commodity IN SOME AREAS. I just spudded a well in an oil trend in Texas that has produced 4.5 billion bbls or oil. It doesn't matter if oil goes to $300+/bbl no additional volume of any significance will ever be produced from this trend. It's fairly well drilled up. That can be said for all the mature conventional oil trends in the US. In fact, the same could be said about every hot shale play today...eventually.
My new well is an horizontal effort at EOR. If it's very successful and applied across the entire maybe we can add 3% or 4%...over many decades. This field has produced 28 million bbls of oil. There is zero possibility of a field of this size ever being discovered in the trend even if oil went to $1,000/bbl. There is not enough undrilled areas for such an accumulation to physically exist. Last year I drilled 3 exploratory wells for reservoirs in the same trend. My targets averaged about 50k bbls of oil each. Those were the largest undrilled areas we could find. And all 3 failed to find even one bbl of oil. Higher prices for oil can’t create oil where it doesn’t exist. But they do allow you to drill in riskier and more expensive areas. But that leverage doesn’t guarantee you’ll find a lot.
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by John_A » Tue 02 Jul 2013, 11:21:55
$this->bbcode_second_pass_quote('ralfy', '')$this->bbcode_second_pass_quote('John_A', '
')Of course energy costs are measured in money.
If you do that, then energy can be cheap easily as credit can be created easily.
Economics doesn't work that way. Print money all you'd like, create it however you wish, and it doesn't cause anything to be cheap. This is how much money bread suddenly costs. Just imagine how much oil would be.
$this->bbcode_second_pass_quote('ralfy', '
')And what "ballpark" did IEA reveal?
Seen this one bandied about, wonderful graph. 9 trillion barrels total is the ballpark. We've used a little over 1. Where is the Heinberg equivalent?
$this->bbcode_second_pass_quote('ralfy', '
')Total oil and gas production will only rise by around 9 pct during the next two decades. What's the problem with that? Oil consumption has to rise by around 2 pct to ensure economic growth.
You keep saying it but obviously haven't calculated the economic growth between 1979 and 1994 and the oil consumption difference. Here is the growth. You should know already what the difference in oil consumption was between 1979 and 1994. Do you happen to notice any hitches in growth because of non-growth in oil consumption? Me neither.
$this->bbcode_second_pass_quote('ralfy', '
')$this->bbcode_second_pass_quote('', '
')I dare you to put conventional crude oil in the gas tank of your car. Or try and fly a plane on it. Crude oil is a chemical feedstock for a refinery, which then turns it into the products "demanded". And the refineries are already building those same products from Bakken oil, and the consumer is none the wiser as to what they put in their fuel tanks.
You don't use the same refineries or employ the same processes for all types of oil.
Explain how the consumer cares about what kind of refinery their gasoline comes from? Why YOU do? As long as the product comes in regular, midgrade and premium, refineries are as irrelevant as their feedstock.
$this->bbcode_second_pass_quote('ralfy', '
')The point of presenting that article, by the way, is to put to question the claim that high oil prices will lead to higher production to meet demand. That didn't happen, as conventional oil production didn't catch up with demand. That's peak oil.
The article has been contradicted both in terms of price (references already provided), inventory available (the point of this thread and references already provided), and certainly it is easy enough to show that peak "what consumers are demanding" has increased with an overall gain in price. Sorry but all three of these facts mean that your article is valueless. See that high in 2008? That was when TOD declared peak oil. Better luck next time?
$this->bbcode_second_pass_quote('ralfy', '
')and oil is now at around $100 a barrel:
It is, and we have now demonstrated that we can manufacture more liquid fuels with it, as demonstrated in the graphic above. And manufacturing fuels leads directly to the IEA graph above as to how much more liquid fuels we can manufacture at a price only slightly higher than $100/bbl.
Do you have any response whatsoever for this rather obvious combination of facts which now allows for the development of the next 7 trillion barrels of liquid fuels, with a complete and total disregard for whatever anyone calls "conventional" oil? The world changed at $100/bbl. The IEA says it changed by 7 trillion more barrels of fuels. Do you have a reference which is applicable to that point?
$this->bbcode_second_pass_quote('ralfy', '
')The irony is that.....
Yes..many ironies. But none of them have so far discounted either the resources available, or the ever growing ability to manufacture liquid fuels from them.
Yes, things aren't as cheap as they once were and might not go back to that cheap. Yes, conventional is mattering less and less, and the less it matters, the more that IEA graphic does.
At the end of the day that is really all that matters, how much do you have (IEA graphic), is it technologically possible to develop it (world liquid fuels graph) and what price will you sell it to consumers for (IEA graphic).
It is no more complicated than that. I understand why you need to make it about ponzi this, credit that, distinctions without differences, one kind of oil matters more than those others even though both are turned into the same products, complex arguments of banking and refineries and whatnot, but what it boils down to has been provided in 2 graphs.
Can you refute the basics of the case in anyway whatsoever?
Oh, and I'm glad we can agree that reserves are increasing. This is progress!
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by John_A » Tue 02 Jul 2013, 11:41:09
$this->bbcode_second_pass_quote('dsula', '')$this->bbcode_second_pass_quote('John_A', 'I')f you want to increase oil flow by 10 million barrels a day I can tell you EXACTLY how to do it, and then I will tell you the price.
Are you sure you can do that? I think the limit is when the complete industrial output and all available energy of the world is geared to get oil. How much is that? 10M? 20M? 100M? 1G?
You are quite right. The upper bound to the amount you can change flowrate in a given year would be the dedication of every man, woman and child, factory and country to doing what needs done to make oil.
An exogenous constraint to the how. Economics can sure be great when you flex it to the limits, am I right about that or WHAT?!
Maybe that is why economists put those non-linear lines in the supply/demand curves? They do basically say that there is no price at which you can supply a given demand. Goodness! Maybe they know some of that fancy pants math stuff! No wonder their stuff works so well sometimes! It would really be nice if there was a peak oil equivalent to the IEA supply/cost curve, if only to start a conversation on the how.
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