[Keith_McClary]

Dynamic (noun)
the forces or properties which stimulate growth, development, or change within a system or process

an underlying cause of change or growth

PO does cause or stimulate change, but "dynamic" has connotations of energy and growth (in my mind anyways - that may be influenced by the adjective meanings marked by usually continuous and productive activity or change, energetic, forceful).

I might speak of an "Oil Era Dynamic", but PO is about the decline of energy and forces, so "dynamic" does not feel like the right word. Can't think of the right word, though.

(Sometimes English doesn't have the right word, we need to adopt from other languages, eg. "schadenfreude", "malaise".)

[ROCKMAN]

Keith – I suppose “dynamic” is another ink blot test: it is what you think you see. When I conjure dynamic I don’t link to growth/loss or positive/negative or good/bad, etc. I only see it as defined in most the references I found:

dy•nam•ic -
•Of or relating to energy or to objects in motion.
•Characterized by continuous change and activity.
•Marked by intensity and vigor.
•Of or relating to variation of intensity.

And the one that seems to fit the POD perfectly: An interactive system or process, especially one involving competing or conflicting forces. Pretty much like I view cancer as a rather dynamic process. And what I do for a living is a very dynamic process that often results in very negative outcomes.

[John_A]

$this->bbcode_second_pass_quote('pstarr', '')$this->bbcode_second_pass_quote('agramante', 'H')ell--what will the peak oil dynamic mean to my cat? It likely might mean in the next few years he'll have to step up his haul of mice, and get off welfare, as my uncle put it.

[ROCKMAN]

A – “…concerns the many different effects of the process of oil production peaking and then declining.” Now that you bring it up PO doesn’t even have to be a component of the POD…at least in just a theoretical example. Consider a world in which PO doesn’t exist and never will: we have the capability to produce 90 million bopd forever.

So no POD then, right? Like heck there wouldn’t be. LOL. In 1990 every one had the oil they needed…if they had the price. But in 2020 thanks to growth in the China there is a demand of 120 million bopd. There's still only 90 mmbopd coming out the ground. So who’s getting the oil and who isn’t? Presumably it will only be those economies that can afford to pay the price. And those, of course, who were able to lock up oil reserves in the ground by buying reserves in the ground or forming joint ventures with the oil exporters. Or maybe some military adventure might develop to secure (to the benefit of a select few that) that never declining oil supply. Those that can’t acquire the oil they need will face a rather limited ability to expand. Of course, at the presumed higher price for oil efforts would be made to drill for more. But my theoretical model says they’ll never produce more oil…at least on a long term basis. Maybe there would just be a plateau developed with occasional increases above 90 million bopd that can’t be maintained indefinitely.

Well heck: how exactly is my hypothetical case much different than what we are seeing today? In this example now only is the date of PO relatively unimportant but even if it never happens we’ll still face a future of not all the economies getting the fossil fuels they'll need to prosper. It would just take a little longer for TSTHTF, eh? LOL.

[ralfy]

$this->bbcode_second_pass_quote('agramante', 'I') think the POD is inherently a vaguer, more multidimensional concept that peak oil is. Peak oil has a very specific definition: maximum global production of crude oil within a given time period. Identifying when peak oil occurs is a conundrum, given the complexity and opacity of global production systems.

The peak oil dynamic, as I've understood it so far (and it's your concept, Rock, so I'm not trying to hijack it--river to your people though you may be), concerns the many different effects of the process of oil production peaking and then declining. There's a limitless number of these effects, from macroecnomic, to geopolitical, to environmental, so socioeconomic, to emotional, and many more. Hell--what will the peak oil dynamic mean to my cat? It likely might mean in the next few years he'll have to step up his haul of mice, and get off welfare, as my uncle put it.

[Keith_McClary]

$this->bbcode_second_pass_quote('ralfy', 'F')WIW, the effects of peak oil may take place when demand exceeds production.

[ROCKMAN]

Ralfy/Keith – Was thinking about the demand/supply/pricing dynamic driving in this morning.
Consider “the effects of peak oil may take place when demand exceeds production”. But demand (at a certain price) can’t exceed production whether global PO has occurred or not. No one would argue that the world had reached PO in 1986. But at that time there was no demand for oil priced above $10/bbl or so which is why oil fell to that price. IOW there was the ability at that time to produce more oil than the buyers could afford to purchase. Same condition today perhaps: there is probably some more oil that could be brought to the market place. Maybe not a lot but some. But there are no buyers for oil above current prices. As was said:” …demand is synonymous with production (assuming a "market" price)”. From strictly the US perspective that’s exactly how the dynamics have responded as seen by increased US oil production over 40 years after we hit our PO.

These dynamics didn’t depend on the world being at PO in 1986 or the US being at PO in 1971. Perhaps it doesn’t depend on the world being at PO today. The current price of oil appears to be a function of how much those competing for oil can pay. So again back to my theoretical model: assume we’ve at global PO and have been there since 2005 or so. But if we were at GPO why did prices drop below $40/bbl in early ’09 if we hit the max production limit years earlier? Easy answer: because for that short period of time there was no market for oil priced above $40/bbl. IOW supply and demand were in balance.

And today? The market is fully supplied with the oil it is capable of paying for. No buyer with that price in his pocket is unable to buy all the oil they want. That’s true whether we’re at GPO or not. And if we aren’t at GPO than why are oil prices so high? Because the competition for oil is greater now than before. More important, the competition can pay the current price. Again: it’s more important how fast the other guy runs than how fast the bear runs. And it’s more important how much the other guy can afford to pay for oil than how much is available in the market place IMHO. If for some unknown reason the economies of China and India blew up tomorrow they may not be able to pay more than $60/bbl. If that were to happen (losing a competitor with a fat wallet) one might expect prices to decline significantly.

OTOH, and back to the purely theoretical model, if ELM continues on its path the exporters will be delivering less oil to the market place over time. So even if we haven’t reached GPO there would be less oil available in the market place. But even then the price will be determined by the ability of the consumers to pay for what oil is available. Take an extreme case in the model: ELM removes 20 mmbopd from our never declining 90 mmbopd capability…IOW no GPO. Would oil be selling for $150/bbl or $60/bbl? You can’t predict based on just these assumptions. If the world is in recession and consumers can pay no more than $60/bbl then that will be the price. And if the economies are strong (especially that of the US, China and India) oil might be selling for $150/bbl…at least for while if that price doesn’t bust those growing economies.

But notice none of the theoretical dynamics I’ve tossed out depend on us being at GPO or not. Of course, that doesn’t mean max global production isn’t a key factor. But it isn’t the only factor and under some conditions has little to no impact on our lives. The world diving into a deep recession in the 80’s lead to $10/bbl oil. That happened in the US despite the fact we had passed out PO 15 years earlier. If the oil consuming nations were to go into deep recession oil prices would fall whether we hit GPO in 2005 or not.

Back to why I use “dynamic” in the POD catch phrase. Nothing in the system is static. Nothing in the system functions independently from the other components…the feedback loops guaranty that. Trying to use only max global production rates as some metric to predict the future is just too unsophisticated IMHO.

[John_A]

$this->bbcode_second_pass_quote('pstarr', '[')img]http://www.agingsociety.org/agingsociety/Civic%20Engagement/golden_gate_hdr.jpg[/img]

Not built with electricity.

[ralfy]

$this->bbcode_second_pass_quote('Keith_McClary', 'A')s I've said before, in Economics, demand is synonymous with production (assuming a "market" price).

[ROCKMAN]

Ralfy – And there’s the problem with such charts: the production chart is bbls of crude oil and the consumption chart is bbls of liquid hydrocarbons. Of course, had the consumption chart been for crude oil only it would have been identical to the production chart. So they do an apple to orange comparison that requires the reader to study the footnotes to understand the difference in the two. If they want to highlight the growth in non-crude oil liquids just post that chart alone and save the ink on the other two. Simply say they anticipate supply will always equal demand. Which will obviously confuse folks who don’t understand that pricing with control demand.

[ralfy]

But even with high prices demand still went up for the rest of the world:

http://ourfiniteworld.com/2013/04/11/pe ... e-problem/

This might help:

http://www.motherjones.com/kevin-drum/2 ... ned-future

My guess is that unlike oil credit is created much more easily:

http://www.washingtonsblog.com/2012/05/ ... arket.html

such that as the U.S., EU, and Japan experience a drop in oil consumption due to fallout from financial risk-taking, consumption grows for the rest of the world due to the same credit creation plus additional credit moved to Asian and other markets. This might explain why as a car culture "ends" in some countries it grows in others:

http://www.nytimes.com/2013/06/30/sunda ... lture.html

and as part of rising resource consumption in general:

http://motherboard.vice.com/blog/asia-i ... -the-world

https://www.un.org/apps/news/story.asp?NewsID=44738

With that, we should see more attempts at credit creation amid what is essentially an "oil-constrained" global economy.

[dcoyne78]

The following chart gives a feel for the POD, which in many ways began around 1972, data from the EIA for crude plus condensate (C+C).

DC

[ROCKMAN]

DC - Exxacty. I'll risk boring folks again with the same old story. But when I started in 1974 my mentor, time clearly outline the POD to me which, of course, we didn't have a cute acronym for at the time. Tim was very old school having gotten back in the oil patch after a stint as a fighter pilot during WWII. A dry Okkie wit but a true visionary especially compared to many of the Mobil Oil management at they time. Even then many were only focused on the quarter to quarter time frame. Amazingly in 1975 he was speculating as to how difficult life may be with regards to energy in the 2020"s for my baby nephews and nieces. I couldn't really appreciate what he was saying at the but as years passed and with the POD alternately enriching me and kicking me in the teeth I came to appreciate his wisdom

[Pops]

Due respect ROCK, but take "Peak Oil" out of "Peak Oil Dynamic" and you're left with BAU and we might as well be in the comment box queue on HuffPost or some other pop-culture hell.

Sure, cartels and growth and politics and religion and guns and etcetera complicates the picture, but it's been thus for generations. Forever. Forevermore. We'll never know when "geologic peak" is because it's never been about geology, it's always been about profit and power and politics and wealth and tribal tit-for-tat - the "dynamics".

Peak oil is becoming the driver of the dynamics rather than vice versa. it explains why someone hasn't turned a few spigots and made up for the million or two of lost production, or sunk a few new wells and brought forth a gusher of new oil that would flow for decades. We'd have seen a short term spike in price then a glut as the market became oversupplied, just like always.

But this ain't like always, the dynamics look the same but the plateau (read that "oil peak up close") part is different.

I don't need to tell you that after the shock of the early '70s, oil supply went almost vertical for a year or two, increasing 25MM bopd - 50% - in less than a decade. Today we can't get a tenth of that increase of what used to be called "oil".

So yeah there are "dynamics" but as much as we may wish it, this doesn't look to be shaping up like 1972 and I'm going to say the reason is peak oil; not PO Lite, or Peak Demand or POD but Peak Oil. We're soaking in it.

In keeping with my new signature I'll operate with some level of uncertainty because I have no idea how long we may go up or down a couple of million bbls a day. I have no idea if we'll do it for a few years or 10 and I don't know how steep decline will ultimately be but I'm convinced some scribe in the future will mark down this time as the peak - generally.
.

[ROCKMAN]

Pops - OK: a simple assumption: there is no PO. The world will continue producing the current rate of oil. So now the oil producers continue increasing their internal consumption as their population growths require. Result: less oil for the importers. Next China and India continue to grow and increase their oil imports at their current ravenous rates. Result: much less import oil available for the US and others. Now one more scenario that appears to be playing out today: civil unrest in oil exporting countries often fueled by their govt's inability to meet the demands of their struggling poor. Result: at a minimum an uncertainty in the market place than can produce instability. At the worse the long term loss of oil exports.

So there you go: no PO and the real potential for the POD to bite you hard in the butt. LOL. Like when Canada, which we assume sees no decline in oil production, begins shipping half of it exports to Asia inside of the nearly 100% that currently goes to the US. Like when México, which not only doesn't decline in oil production but increases production, expands oil exports to China. Exporting which they've already started on a small scale. Like when Venezuela builds the pipeline from the Orinoco across Colombia so they can export their oil out of Pacific coast ports to China. Those negotiations are underway.

Can you feel those "no PO" teeth sinking in a little deeper? LOL. That's the POD you're sensing. Here's an even more obvious proof of the disconnect between PO and the POD: the US has experienced the most rapid growth in oil production in our history. Feels pretty anti-PO, eh? Now then: what did you pay for gasoline the last time you filled up? Feel that hot POD breath on the back of your neck? LOL.

[Pops]

But ROCK, why is production flat in your scenario? My guess is it's because production has actually peaked, it only appears flat because the observers expected Peak to have a definite day and hour, a pre- and post, a before and after, a Happy Motoring and Mad Max. They wanted it to look like Berthoud Pass in Colorado instead of a road sign in New Mexico.

The ELM effect didn't just appear, it was always there but with increasing production no one cared. If one exporter used up all their own production we just found another. We care now because we're peaking and there isn't an "other" when Libya/Iraq/Iran turns to mush.

Why is gasoline high? Because 63 countries have peaked and are in decline and the other 36 are not able to increase production enough to meet increasing demand - or even stagnant demand.

Why has the fastest increase in US supply ever done nothing to lower prices? Because it is a drop in the bucket no matter the PR hype, it doesn't even make up for the amount lost from Libya and Iran.


I understand, you want to avoid the argument that says "Lookie!, supply of Refinery Gains increased .000001% last year! Nya Nya! No Peak!" But pretending like we've seen it all before merely perpetuates the idea that this is BAU and it isn't.

--
Lets see, I better mention Libya before I have to moderate myself LOL:
$this->bbcode_second_pass_quote('', 'T')otal Libyan oil output amounts to just under 200,000 barrels per day, compared with pre-war levels of around 1.6 million bpd, according to a Reuters estimate, the worst disruption since the civil war in 2011.

[ROCKMAN]

Pops - Sorry I didn't make my point clearer: the ASSUMPTION is that oil production never peaks...we stay at current rates forever. Yes...not realistic but that's my point: even if the global oil rate never declines the world will still be "running out of oil" for the reasons I described. And more than that the dynamics of who can acquirer that constant supply of oil becomes critical. China has made it clear: they plan to be at the top of that leader board in the not too distant future. Again not likely but assume Canada and Mexico begin shipping all their oil to China because economics dictate it. Or not as farfetched: another Arab Spring hits Saudi Arabia and for some period of time none of their oil is sold to non-Muslim economies.

So even with no PO the dynamics of a world with increasing consumption, increasing changes in oil distribution patterns and global political strife the US consumers are faced with a worsening situation. A situation resulting from all those various factors controlling how much we ultimately have to pay for energy here. IOW the POD. Again consider that ASSUMPTION is true at this very moment: the world has not reached global PO. Many would argue that this is true. IMHO the POD is playing havoc across the entire globe at the moment. PO is not because we haven’t peak global or are just in the process of reaching it.

Again consider the facts: the US is currently producing as much oil today as we were in 1997. Yet oil prices are 4X higher than they were then. Today we are importing the same amount of oil as we were in 1997. Yet oil prices are 4X higher than they were then. The world is currently producing almost 20% more oil than it was in 1997. Yet oil prices are 4X higher than they were then. So the US is producing as much oil, importing as much oil and the world is producing a lot more oil than when oil was selling for ¼ of what it today. Can you point out where PO is affecting those stats? Except for the increase in oil price all those numbers would appear to deny the significance of PO. So why are oil prices so much higher now than in 1997? The many factors are complex as I’ve made the case before. Which is why I choose to wrap them all up in that shorthand: the POD.

[Pops]

I take your point, the plateau is bad even without a peak; ELM, nationalization, prices, crises, etc

My point is that it is becoming more and more likely the plateau is the peak and what comes next isn't more plateau, it's decline. And as bad as the effects may be now, we ain't seen nothing like when decline begins in earnest.

Thats why I need to keep repeating that this isn't some new BAU, that peak oil has not been rescinded to be replaced by POD or Peak Oil Lite or an endless plateau of inconvenience. This is the peak of the oil age and folks need to understand that.