Here’s what I take from the various charts. The world less USA (WLUSA...and thanks for that Revi) chart seems to indicate a global plateau starting in 2005. Brent was trading around $58/bbl at that time...almost double from just a few years earlier. US production was not increasing then but rather still at a slight decline to flat. Then oil prices collapsed in early 2009 and the WLUSA curve is still plateaued. And then oil bounces back to $100+/bbl from 2011 to 2014 and the WLUSA curve is still plateaued. USA production starts booming during that period but how would that suppress global oil development as long as prices are still almost double what they were in 2005? IMHO that should add some doubt that USA oil production increases had anything to do with a lack of UK (or anyone else's) oil development as long as prices stayed high.
Of course now lower oil prices are going to suppress all global activity in addition to USA activity. But the WLUSA chart seems to clearly indicate that the world could not respond with increased production even when prices were at record levels. That might be the best indication that the world had reached, or at least was approaching, PO. But we still have to allow that big international projects take many years to come to fruition.
So what about the new record breaking global oil production rate with lower oil prices? It seems rather intuitive that the current global production isn’t from newly developed resources but rather increased production from already proven and developed fields. IOW the KSA didn’t increase its production by solely developing new reserves but just increased production from its existing wells. If anything the record global oil production doesn't argue against global PO but more likely indicates we’ve just gotten shoved closer to GPO especially when you take into account the loss of incentive to develop new reserves as a result of the oil price collapse.
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When do we fall off the undulating plateau? Pt 2
Re: When do we fall off the undulating plateau?
by ROCKMAN » Tue 20 Oct 2015, 13:38:29
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Re: When do we fall off the undulating plateau?
by Revi » Tue 20 Oct 2015, 14:36:22
Saudi Arabia has a lot of oil, but are they a swing producer any more? In other words, can they increase their production and flood the market any more? They have a high water cut in their biggest fields, and have for years, so maybe they are over the peak also, in which case we are all over the peak, as said by Matt Simmons in End of Suburbia.
I got that chart from Peak Oil Barrel, so the credit goes to Ron Patterson who predicted that we would hit peak oil in the US and globally in April or May of 2015. It may have happened,but we won't know for a while.
I got that chart from Peak Oil Barrel, so the credit goes to Ron Patterson who predicted that we would hit peak oil in the US and globally in April or May of 2015. It may have happened,but we won't know for a while.
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Re: When do we fall off the undulating plateau?
by ROCKMAN » Tue 20 Oct 2015, 16:45:09
pstarr - With the possible exception of a small ramp down due to the US shales slowdown I never see the world "falling" or "stumbling" off the plateau. Just a more or less continuous relatively slow decline. Most of the fields supplying the world are rather old and have reached a relatively low decline rate phase. The exception would be Deep Water GOM fields but they actually only represent a few % of global oil production.
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Re: When do we fall off the undulating plateau?
by dolanbaker » Wed 21 Oct 2015, 01:41:47
When you factor in the sheer amount of fuel that can be saved simply by making minor changes to how things are done, a 10-20% drop in supply can easily be absorbed with little affect on normal day to day living.
But it will cause a recession.
But it will cause a recession.
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Our whole economy is based on planned obsolescence.
Hungrymoggy "I am now predicting that Europe will NUKE ITSELF sometime in the first week of January"
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Re: When do we fall off the undulating plateau?
by davep » Wed 21 Oct 2015, 04:04:52
$this->bbcode_second_pass_quote('pstarr', 'w')hat minor changes?
IIRC, the French were pretty elastic in their car usage when prices spiked in 2008. Consumption went down by about 25%, I think.
For me, the problem is that the economic system will be torn to shreds before any major decrease in oil production. Some will then blame the economic crisis for the lack of oil demand
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Re: When do we fall off the undulating plateau?
by sjn » Wed 21 Oct 2015, 05:31:03
$this->bbcode_second_pass_quote('davep', '')$this->bbcode_second_pass_quote('pstarr', 'w')hat minor changes?
IIRC, the French were pretty elastic in their car usage when prices spiked in 2008. Consumption went down by about 25%, I think.
For me, the problem is that the economic system will be torn to shreds before any major decrease in oil production. Some will then blame the economic crisis for the lack of oil demand
A lot of people lost their jobs: consumption went down. Supply and demand are not separate variables; but highly dependent. There needs to be a certain level of demand to enable prices high enough to make marginal production profitable. Yet only as much oil as has been discovered can be developed in the medium term, and can be brought on line in the short term, no matter the price.
Of course, demand requires people to have jobs performing economically productive activities [pie making], this becomes difficult when oil prices are too high [too large slice of the pie] causing recession, or when oil producers are unable to operate at a profit due to low prices and default on their debts, pulling capital from secondary to economic activities and contracting the economy further depressing demand [shrinking pie]. Of course it's not just oil.
The only way to have a mostly stable growing economy [pie] with a growing population and rising standard of living is to have a growing commodified resource base, with demand moderated by commodity prices. Too high prices triggers recession, and spurs greater production which moderates prices, this is what we've experienced for the last 100+ years.
"The Undulating Plateau" has seen marginal production costs constantly rising which has manifested in price volatility since it begun 2004/5: we've seen recession triggered from too high prices; depression from too low prices. There's no equilibrium, but a shrinking channel between prices too high and too low. We'll fall off when they meet. [No more pie]
I suspect most here will now agree with the above.
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Re: When do we fall off the undulating plateau?
by davep » Wed 21 Oct 2015, 06:05:01
My point was just that we don't need a "mostly stable growing economy", as the growth requirement is unnecessary and merely a function of our current monetary system.
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Re: When do we fall off the undulating plateau?
by sjn » Wed 21 Oct 2015, 06:33:41
$this->bbcode_second_pass_quote('davep', 'M')y point was just that we don't need a "mostly stable growing economy", as the growth requirement is unnecessary and merely a function of our current monetary system.
Then where does the capital come from to "invest" in new production of ever higher cost commodities?
There either needs to be excess capital produced from economic activity, or (exponential) monetary expansion, as you just indirectly alluded to. How sustainable are either options?
The only alternative outside our "current monetary system" is to replace it with a non-market vertically integrated or demand system, where resources are produced for specific applications as needed. Of course that's more than just a different monetary system!
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] doesn't really matter. In order for the capital to be available for the non-economic activity, there has to be an excess of capital (debt or equity) over what the secondary and tertiary activities require to function. Am I missing something?
