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Rough Math

Discuss research and forecasts regarding hydrocarbon depletion.

Re: Rough Math

Unread postby DesertBear2 » Wed 11 Apr 2007, 17:10:41

$this->bbcode_second_pass_quote('kmann', '
')As I see it: Decrease in Available Exports = Exporting Countries depletion + Exporting Countries increase in demand


This is an important issue. Maybe we could come up with some revised numbers here.

Kochevnik also touched on another important factor here- that is the process of exporting countries being forced to become importers.. of course this is happening in the UK and will soon happen in Mexico.
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Re: Rough Math

Unread postby Twilight » Wed 11 Apr 2007, 20:32:25

Nevertheless, mix-up or not, this is an important question. It should be possible to come up with an estimate - exporting countries are relatively few and known, EIA has production figures, ASPO has real or estimated peak dates and decline rates. Then it's just a case of how high internal consumption and demand growth are going to be. It should be possible to produce a curve for that.
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Re: Rough Math

Unread postby SevenTen » Wed 11 Apr 2007, 23:06:10

$this->bbcode_second_pass_quote('DesertBear2', '')$this->bbcode_second_pass_quote('kmann', '
')As I see it: Decrease in Available Exports = Exporting Countries depletion + Exporting Countries increase in demand


This is an important issue. Maybe we could come up with some revised numbers here.

Kochevnik also touched on another important factor here- that is the process of exporting countries being forced to become importers.. of course this is happening in the UK and will soon happen in Mexico.

Decrease in available exports may also have to do with war and associated infrastructure damage. Doesn't have to come from depletion.

And the problem is much more serious than most people realize. We won't be producing 55 mbpd in 2020. There is the net oil problem, and there is the problem about growth.

If we aren't able to grow, if we aren't able to solve the numerous inherent problems of our world by rapidly acquiring more resources, the system breaks down in numerous ways.

When more and more countries want to switch from being exporters to being importers, where, exactly, are they importing from?
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Re: Rough Math

Unread postby gg3 » Thu 12 Apr 2007, 10:36:30

I don't have a basis to comment on the production figures or the math.

However as far as geopolitical impacts are concerned, it seems to me that petroleum depletion is going to be a picnic compared to what happens when climate change gets serious.

After the Iraq fiasco there comes a "Vietnam syndrome" where at least in the US, voters will be less willing to support wars unless in defense against actual acts of military aggression. (F---ing Bush Administration has just de-fanged us for another 10 - 20 years unless a Democratic president can rebuild the military somehow despite national debt etc. etc....)

The cost of war gets compared against the cost of other alternatives. $400 billion into Iraq = opportunity cost of 300 nuclear reactors and 100,000 wind turbines. I doubt we'll make that mistake twice in a row.

Petroleum is more replaceable than water and stable temperatures for agriculture. Petroleum depletion is linear, food production can suffer enormously from one bad year. We can linearly replace petroleum up to the point where depletion affects fertilizer production. We cannot replace rain and stable temps in farming regions.

Meanwhile, overseas, dieoff will be "allowed to proceed" in Africa and other regions that are "deemed" to be "lost cases." (Don't you just love that word "deemed"? You never get to hear about who does the "deeming.")

Eventually the water & food shortages hit a place such as India which is technology-capable (and in this case nuclear-armed) to a degree as to cause major social instability. This is where we begin to see a high risk of regional wars of major international consequence. Somalia and Darfur are humanitarian disasters but India/Pakistan fighting at the border brings up the spectre of them lobbing nucs at each other.

China may suffer serious social instability as well; the signs are already present in terms of riots and suchlike that are carefully kept off the news, but about which reports leak out.

At some point the rate of petroleum depletion is such as to have impacts beyond the primary energy sector, for example fertilizer production for staple foods. That would be the point at which petroleum depletion could trigger resource grabs.

The "Nazi scenario" of massed troop invasions and instructions to rape and loot is nonsense. That's cheap doomer porn with a bad plot line, focused too heavily on direct personal barbarism (rapes and looting), rather than on strategic objectives that can be obtained via other means such as nuclear attack or conventional attacks on infrastructure (e.g. Iraq minus water supply & electricity).

Each of the three major nuclear powers (US, Russia, China) has an incentive to kill off the others in order to obtain unrestrained access to resources. A country that is up against the wall for food may decide that a nuclear war is a viable option simply because it reduces the number of mouths all'round while doing comparatively less damage to food supply.

Nuke the cities, take down the population levels, keep the rural areas intact: now your adversary is off the table as far as international resources are concerned, and has a major rebuilding task, but has a lower population level relative to its potential agricultural productivity. Thus they tend to stay at home and stay out of your way while you grab resources.

And if your adversary lobs a few back at you, that takes down your own population levels also and thus relieves pressure on your own food/water supply.

Twisted logic, that, but I could see it being discussed and possibly acted upon. And it does make sense after all, since population is the driving force behind all the rest of it and there is a serious need to get down to about 2 - 3 billion humans ASAP. And the "nuclear winter" effect from even limited nuclear exchanges could reduce global temps slightly and buy more time to deal with climate change.

You can call this scenario "nuclear war as humanitarian gesture."

Damn.
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Re: Rough Math

Unread postby kochevnik » Fri 13 Apr 2007, 00:45:49

gg3 :

I think your humanitarian war is almost guaranteed in the next decade or two.

It's too logical not to be tried by someone.
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Re: Rough Math

Unread postby DesertBear2 » Fri 13 Apr 2007, 03:34:42

$this->bbcode_second_pass_quote('gg3', '
')
You can call this scenario "nuclear war as humanitarian gesture."

Damn.


This would be a tough call even for the most hardened decision maker. Lobbing a nuke into an urban area....

It's hard to imagine even one 3-year old kid walking around blinded with half of their skin seared off.
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Re: Rough Math

Unread postby EnergyUnlimited » Fri 13 Apr 2007, 04:28:05

$this->bbcode_second_pass_quote('gg3', 'T')he "Nazi scenario" of massed troop invasions and instructions to rape and loot is nonsense. That's cheap doomer porn with a bad plot line, focused too heavily on direct personal barbarism (rapes and looting), rather than on strategic objectives that can be obtained via other means such as nuclear attack or conventional attacks on infrastructure (e.g. Iraq minus water supply & electricity).


It looks like WW 2 was only cheap doomer porn with a bad plot line and nonsense focused heavily on personal barbarism.
Maybe it wasn't even real?
Who knows? Maybe our historians and grandparents are all liars?
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Re: Rough Math

Unread postby gg3 » Fri 13 Apr 2007, 05:20:35

No, EU, it looks like you're confusing 1930s/40s weapons with today's, and conflating strategy with tactics. And if you were trying to suggest by insinuation something like holocaust denial, have a porcupine suppository for good measure.

The future doesn't look like the past, except possibly in geological terms.

---

The specific scenario I was thinking of was China + Russia ganging up on the US to remove from the world the largest consumer of resources and divide the rest between themselves. A friend in MI says it's unlikely, and a friend from China pointed out that they have never engaged in aggressive wars of territorial conquest (Tibet etc. notwithstanding). However, once again, the incentives are compelling and the means are available.

We have a window of opportunity in the next administration to make ourselves less hated around the world and thereby reduce the probability of this happening in the next 10 - 12 years.

---

Aside from that, six feet of earth overhead reduces radiation from fallout by over 99%, which is considered sufficient for shelter purposes. Ferrocement is a highly useful material for building underground structures with arched roofs.
Last edited by gg3 on Fri 13 Apr 2007, 06:22:15, edited 1 time in total.
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Re: Rough Math

Unread postby The_Toecutter » Fri 13 Apr 2007, 05:59:28

$this->bbcode_second_pass_quote('', 'T')he specific scenario I was thinking of was China + Russia ganging up on the US to remove from the world the largest consumer of resources and divide the rest between themselves.


In the novel The Sheep Look Up, some saw this as a solution. Eliminate the most wealthy and the most wasteful consumers of the world's resources.
The unnecessary felling of a tree, perhaps the old growth of centuries, seems to me a crime little short of murder. ~Thomas Jefferson
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Re: Rough Math

Unread postby stu » Fri 13 Apr 2007, 09:07:15

[moved from geopolitics forum]
"The age of excess is over. The age of entropy has begun"
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Re: Rough Math

Unread postby EnergyUnlimited » Fri 13 Apr 2007, 11:02:59

$this->bbcode_second_pass_quote('gg3', 'N')o, EU, it looks like you're confusing 1930s/40s weapons with today's, and conflating strategy with tactics. And if you were trying to suggest by insinuation something like holocaust denial, have a porcupine suppository for good measure.

The future doesn't look like the past, except possibly in geological terms.

The future does not look like the past in the world of expanding economy, which we are used to.

On the other hand it may begin to look more and more like a past in the world if contracting economy, which we are about to enter.
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Re: Rough Math

Unread postby MonteQuest » Fri 13 Apr 2007, 12:23:25

$this->bbcode_second_pass_quote('Twilight', ' ')Just for the sheer hell of it, let's assume the 1 mb/d annual demand growth completely ceases in 2010 as a result of economic crisis in spite of continuing growth in population...


This is the part of the math often left out.

The "shortfall" must include growth demand as well as depletion.

Projections right now are for a 1.7% annual demand growth rate which is about 1.5 mbpd.

However, as you posit, we could have an economic implosion...

But that could also affect oil production negatively which could make the shortfall even worse.
A Saudi saying, "My father rode a camel. I drive a car. My son flies a jet-plane. His son will ride a camel."
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Re: Rough Math

Unread postby kochevnik » Fri 13 Apr 2007, 23:50:26

In spite of my bad math, I still think the key here is exports. If a country produces X barrels of oil and uses X barrels of oil, they might as well not even EXIST in the modelling of oil depletion.

So we have 36 mbd of exports to share. Demand is probably pretty close to that 36 mbd figure NOW, otherwise the price would be skyrocketting.

If exports decline on some curve from depletion, then we need to model the curve of demand. Up until now, demand = imports = exports. That goes out of sync in the near future because demand is going to rise because of :

1) Population increases
2) lifestyle increases (GM's car sales in China for example)
3) Countries that were exporters will be moving towards being importers (Mexico)
4) Psychology - As the oil becomes more valuable, suppliers will begin to hold back because it will be worth so much more in the future than it is now AND as word gets around that supplies are tighter, customers for oil will try to develop methods of ensuring future supply - thereby driving prices up as more and more contracts are locked up

How can we model demand ?
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Re: Rough Math

Unread postby Twilight » Sat 14 Apr 2007, 22:47:44

$this->bbcode_second_pass_quote('MonteQuest', 'H')owever, as you posit, we could have an economic implosion...

But that could also affect oil production negatively which could make the shortfall even worse.

That's very true. As we know, the Soviet Union hit peak around 1988, and the bell curve with its steady, orderly depletion proved to be only a rough guide. It is the largest case study we have of production impacted by purely economic circumstances. The UK North Sea did the same for technical reasons, but the root cause was cutting every possible corner to reduce costs, economic pressure but of a different sort.

I agree it is likely that an economic implosion would affect the output of producing nations through political instability and worsening labour relations. What happened in Venezuela and Nigeria could happen elsewhere. For example, if the Norwegian $300bn oil investment fund collapses (its equity exposure is about to be increased from 40% to 60%, all in overseas markets), then the world's fourth largest exporter could see its 40-year-old energy strategy completely rewritten, after the public has had its blood. Even the most reliable exporter in the world cannot be relied upon in those conditions. A stable country of under 5m people doesn't need much money to support itself, and probably wouldn't be so hungry for cash if told the government just lost tens of thousands of earned dollars per citizen.

I think there are a lot of wildcards like that, which no-one can call, and there is little to be gained from trying. This applies to sceptics and doomers alike. Identifying underlying trends is one thing, but the economic/political tripwires everyone sees are usually not the ones you actually hit. No-one sees those clearly.

$this->bbcode_second_pass_quote('kochevnik', 'H')ow can we model demand ?

It is difficult enough to model supply once people start playing politics with energy. Assuming no interference, it would be easy to take some EIA numbers and ASPO predictions, and work out a depletion curve for current exporters only. Naturally it would only be valid for that particular set of assumptions.

Demand, that's tricky. What will people want? Right now, the world demand growth rate is simply the population growth rate, 1.7% or so. That's an easy way of acknowledging the link, but saying we don't know. We could just take 1.7% and introduce it to the model outlined above, saying, here is extra demand placed on exports; 1.7% of current global consumption.

However, it could take off faster, if the Indians and Chinese get their home-grown $10,000 people's cars. Then demand-wise there may no longer be a point in making a global estimate. At some point it simply may no longer be useful, people would have a greater practical need to work it out for specific countries, permanent failure to meet global demand being a given.

Either way, I don't think the downslope is going to be as smooth as the rise to 1973.
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Unread postby Mircea » Sun 06 May 2007, 19:23:44

$this->bbcode_second_pass_quote('kochevnik', 'T')o be honest - I'm a little disappointed here - I've been gone since I posted this and I was kinda sorta hoping someone could show me where my math doesn't make sense.

Instead all I got was a whole lotta -'Well, it's wrong because it just has to be wrong' or 'It's wrong because I say so'

If the math isn't wrong by at least a magnitude somehow, then I feel pretty sick to my stomach, to tell you the truth.


The math is wrong and I'll show you were it is.

$this->bbcode_second_pass_quote('kochevnik', 'W')orldwide population and standard of living is still increasing (look at how many cars GM sold in China is month - 300k).


That's very ethnocentric.

I'd highly recommend trying to find a summer course or night class in Chinese geography. You'd enjoy it plus you'd understand why there is a glass ceiling (a limited market) for cars in China. In the alternative, a course in Chinese history from 1945 on would do, but I don't think it would be as satisfying as a geography course.

$this->bbcode_second_pass_quote('kochevnik', 'S')o in a typical year going forward, we see the 36 mbd export pie get :

a) depleted: 2 mbd


First error is an assumption that this figure is static. It isn't. It's dynamic and there are many variables. However, you're covering the period through 2017, which is (for production) short term, so I'm going to agree with you.

We aren't going to see anything out of UNOCALs Central Asian fields until the Iran thing is resolved, even then it'll be maybe 2020. The deep fields in the Gulf of Mexico, well, you'd be lucky see anything come out of there before 2035-2040. The Saudi Empty Quarter, maybe after 2020. The 9 Tracts in the Syrian Desert (Iraq), same same. Iran's new oil and gas field in Khuzestan, maybe 2015.

$this->bbcode_second_pass_quote('kochevnik', 'b')) population increase = demand rise: 1 mbd (conservative)


Population increase doesn't automatically equate to a rise in demand. In any event, that's overly liberal.

$this->bbcode_second_pass_quote('kochevnik', 'c')) exporters become importers: 0.5 mbd - (wild ass guesstimate)

It isn't relevant.

There are 4 factors that doom your math:

1) You assume a static situation

2) You don't take into consideration usage.

3) You ignore that the US uses 25% of all the world's oil.

4) You don't take into account the Price Elasticity of oil.

$this->bbcode_second_pass_quote('kochevnik', 'E')xtrapolate:

2007 - 36 mbd exports available
2009 - 29 mbd exports available
2011 - 22 mbd exports available
2013 - 15 mbd exports available
2015 - 8 mbd exports available
2017 - 1 mbd exports available

We'll recalculate this taking the aforementioned 4 factors into consideration.

The population at the end of the year will only be 63,565,783 more than we have now.

3.8% of the population uses 25% of all the world's oil. That means 96.2% of the world's population uses the other 75%.

For easy math, we'll use 80 mbd (a little less than real production) and we'll look at the usage in different terms. Instead of saying 3.8% of the population uses 25% of the world's oil, we'll just say that 15 Americans use 1 bd.

By comparison, in the rest of the world, 107 people use 1 bd.

To recap, 15 Americans use 1 bd, 107 non-Americans use 1 bd.

You're saying 63,565,783 people are going to use an extra 1 mbd?

No freaking way. 60% of those people live in 3rd world countries and their oil use is neglible at most. If we broke it out, you'd find that 1 Billion people (Western Europe/Japan/Canada/AZ) use about 50% of that, another 2 Billion (Eastern Europe/China) uses 25% and the remaining 3 Billion (Africa/Central-South America/Asia) uses the remaining 25%.

Or we could say:

15 Americans use 1 bd
17 1st Worlders use 0.5 bd
35 2nd Worlders use 0.25 bd
55 3rd Worlders use 0.25 bd

We also have to take into consideration that of the 36 mbd being exported, Americans consume 12 mbd of that, or 1/3 of all exports.

Or:

25 Americans consume 1 bd of exports
266 non-Americans consume 1 bd exports

Which breaks down to:

25 Americans use 1 bd of exports
44 1st Worlders use 0.5 bd of exports
88 2nd Worlders use 0.25 bd of exports
134 3rd Worlders use 0.25 bd of exports

When we factor in price elasticity, we see that US oil consumption can realistically be reduced from 25% to about 12% to 13%.

World usage will be affected by price elasticity, but not to the extent that it will affect the US, since oil usage in other countries is not frivolous like it is in the US.

That makes these more accurate assumptions:

Annual depletion rate: 2 mbd

Annual reduction rate: 1 mbd US

Annual reduction rate: 0.5 mbd World

2007 - 36.0 mbd exports available
2008 - 35.5 mbd exports available
2009 - 35.0 mbd exports available
2010 - 34.5 mbd exports available
2011 - 34.0 mbd exports available
2012 - 33.5 mbd exports available
2013 - 33.0 mbd exports available
2014 - 32.5 mbd exports available
2015 - 32.0 mbd exports available
2016 - 31.5 mbd exports available
2017 - 31.0 mbd exports available

New Assumptions

Annual depletion rate: 2 mbd

Annual reduction rate: 0 mbd US (US is maxed out on reduction)

Annual reduction rate: 0.5 mbd World

2018 - 29.5 mbd exports available
2019 - 28.0 mbd exports available
2020 - 26.5 mbd exports available
2021 - 25.0 mbd exports available
2022 - 23.5 mbd exports available

Right about here the World will be maxed out on reduction, and anyway, it's kind of pointless to look beyond that without a fixed geopolitical environment.
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Re: Rough Math

Unread postby kochevnik » Mon 07 May 2007, 00:11:55

Hey Mr. Genius - need to read the whole thread - I already found my math error.

And as for your ethnocentric comment - I LIVED and worked in China for many years. I know China very well - better than you ever will with your PC bullshit. My sister in law (in China) imports cars into the country for a living. Your average Chinese wants a car badder than anything else in the world - they will never stop buying unless the govt forces them to.

so bite me.
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Re: Rough Math

Unread postby Mircea » Thu 10 May 2007, 02:38:14

$this->bbcode_second_pass_quote('kochevnik', 'H')ey Mr. Genius - need to read the whole thread - I already found my math error.

And as for your ethnocentric comment - I LIVED and worked in China for many years. I know China very well - better than you ever will with your PC bullshit. My sister in law (in China) imports cars into the country for a living. Your average Chinese wants a car badder than anything else in the world - they will never stop buying unless the govt forces them to.

so bite me.


You didn't find your error.

PO is paradoxical. The closer you get to PO, the longer it takes to get there.

It's basic laws of Supply, Demand, Price Elasticity and Consumption.

And you missed the point entirely. The McChin family isn't going to be living in a McMansion-xhiang in a bed-room community with 5 freaking cars parked out front like your average US family has.

The US is a car culture, China never will be, and it's more than just economics, it's geography.
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Re: Rough Math

Unread postby garyp » Thu 10 May 2007, 05:45:46

$this->bbcode_second_pass_quote('kochevnik', 'T')o be honest - I'm a little disappointed here - I've been gone since I posted this and I was kinda sorta hoping someone could show me where my math doesn't make sense.

kochevnik, your maths both does and doesn't make sense. In a simple and proportional way its probably not to far off (BTW lookup the exportland model, since that's what you're heading towards)

However the reality is the system is in any case a dynamic one and that the transition from ever increasing supply to ever reducing supply is a phase change in the wider system. That means new rules, new behaviours, upheaval, etc. That will in turn affect the demand AND the supply numbers. EnergyUnlimited gets part of it in his post, political and military grabs for control via any means necessary.

If you really want to model it probably the best approach is a systems dynamics model, but even then the system will be changing in responce to changing structural drivers.

Stepping back, there are some broad brush factors that can be delineated:
- in response to threat, a sizable number of people reaction is to take action, usually violent.
- the global population is such that old (less energy intensive) ways of doing things aren't credible. We can't regress and still have a stable society. Regression might be an end point, but its not a method.
- those with the means will retract into protected enclaves. The rich will convert money into assets and attempt to disappear with them. Expect a roaring trade in caribbean islands.
- the incentive of those with oil, post peak, is to curtail production to sustain capability. This won't go down well, so expect resources to be destroyed in an effort to secure them.
- the western cultural psyche is ill prepared for significant change. Not only is life good, life has been good for a long time and the society is built on growth and money. It won't bend, it will break.
- national and supranational entities are built on a flimsy base. The first instinct of those in power will be to tighten their grip, but in reality they are unlikely to have the ability to carry through. Expect breakup to the city state level.
- two endstate models suggest themselves. One is the subsistance economy, maintaining enough to survive and licking its wounds. The other is the high tech enclave, holding on to as much capability as possible while reducing its energy consumption.

Overall, its not the absolute numbers that matter, its the response to those numbers. In absolute terms we are likely to have the resources of at least the 1960s for the rest of your life. However the changed system will probably mean we don't access those, the civilisation structure having changed that much.
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Re: Rough Math

Unread postby Twilight » Thu 10 May 2007, 14:11:49

When looking at available export volume, it doesn't matter where oil goes once exported. The export pie is whatever it is after producer internal demand, it doesn't matter whether the buyer is the US or India, or what per capita usage happens to be. Price elasticity playing a role in the US? Like it's doing now? Yeah right. Peak oil is a singularity, once you're past the threshold, basic economic laws can get stuffed.
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Re: Rough Math

Unread postby kochevnik » Mon 25 Jun 2007, 10:20:51

My math in the OP may have sucked - but it looks like others have jumped on unique characteristics of the export problem.

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Bunch of copycats if you ask me. :)
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