[Eli]

About a a year ago I thought this is where we were headed.

We will have declining oil prices for awhile but at some point it will turn and we will have the price inflationary pressures of oil as it grows scarce. That may only manifest itself in relative price, with oil remaining stable in price as everything else collapses around it.

The portions of the economy that manage to survive this deflationary collapse will not survive the inflationary spike that will come about when oil grows scarce. It will complete destroy what is left of the oil economy.

[Aaron]

PreCog

[DefiledEngine]

$this->bbcode_second_pass_quote('', 'I')t all depends on how deep and how long the recession is. If we have a global depression thats lasts 10+ years, then we'll see continued demand destruction and deflationary pressure on oil prices for 10 years.......

[yesplease]

$this->bbcode_second_pass_quote('Tanada', 'I') disagree, there is no recorded proof that demand destruction has ever been sustained for more than a year or two and even if we destroyed 10 Mbbl/d of demand it would not take more than a few short years for 9% depletion rates to catch up to that level of production, which in turn drives prices back in the other direction, encourages investment and slows declines even if it doesn't cause things to go back up.

[yesplease]

$this->bbcode_second_pass_quote('Aaron', '[')url=http://www.peakoil.com/modules.php?name=Forums&file=viewtopic&t=47408]PreCog[/url]

[TheDude]

The early 80s decline in consumption can be in part chalked up to fuel switching from petroleum to NG in electrical generation. You might remember me pointing this out to you yesplease, here's a chart I made this morning:



That's 1.23 mb/d we excised in the US. Can't repeat that accomplishment. The early gains in vehicle fuel efficiency are the easiest as well. That early 80s dip is largely chimerical I think. Toyota having to unload 1.3 billion and wait two years to build 200k more Prii per year doesn't bode well for this Al Gore fantasy of reducing OPEC to groveling paupers. And now that new Prii plant is likely facing delays, too.

Also the poorest consumers of oil still use a lot of it for electrical generation, and won't have an alternative like NG to turn to when supply peaks; they'll simply go Olduvai whole hog, barring ultra cheap wind or the like. One bright spot for the poorest sections of Africa is the promise the Grand Inga hydro project holds, but I doubt transmission lines will be built in time to help people outside of those nations bordering Mali before we hit a peak.

[yesplease]

$this->bbcode_second_pass_quote('TheDude', 'T')he early 80s decline in consumption can be in part chalked up to fuel switching from petroleum to NG in electrical generation.

[Tanada]

$this->bbcode_second_pass_quote('TheDude', 'T')he early 80s decline in consumption can be in part chalked up to fuel switching from petroleum to NG in electrical generation. You might remember me pointing this out to you yesplease, here's a chart I made this morning:

That's 1.23 mb/d we excised in the US. Can't repeat that accomplishment. The early gains in vehicle fuel efficiency are the easiest as well. That early 80s dip is largely chimerical I think. Toyota having to unload 1.3 billion and wait two years to build 200k more Prii per year doesn't bode well for this Al Gore fantasy of reducing OPEC to groveling paupers. And now that new Prii plant is likely facing delays, too.

[dohboi]

"Are the tar sands even viable at $40/barrel?"

No, not at anything below 50, as far as I've heard.

Scrapping tar sands would be a very good thing.

Actually a 9% decline rate is too slow, as far as I can see.

We need to halt all extraction and burning of ff pretty much immediately if we want any glimmering chance of avoiding run away global warming that pushes the earth's climate into a deadly spiral. It may well be too late already, but this is our last chance to change course.

Jim Hansen and Ban Ki-Moon agree that we have only about a year to radically change course. It's now everyone's responsibility to move quickly to de-carbonize their energy inputs.

[Tanada]

$this->bbcode_second_pass_quote('dohboi', 'A')ctually a 9% decline rate is too slow, as far as I can see.

We need to halt all extraction and burning of ff pretty much immediately if we want any glimmering chance of avoiding run away global warming that pushes the earth's climate into a deadly spiral. It may well be too late already, but this is our last chance to change course.

Jim Hansen and Ban Ki-Moon agree that we have only about a year to radically change course. It's now everyone's responsibility to move quickly to de-carbonize their energy inputs.

[seahorse]

Another article confirming we walk the path to the IEA nightmare scenario.

$this->bbcode_second_pass_quote('', 'W')hen crude prices hit unprecedented highs last summer, followed closely by gasoline and diesel, consumers reacted by driving less and conserving more.

Then prices began an equally dramatic fall to levels not seen since 2004, exacerbated by the growing global recession.

However, increasing delays in new production projects could create an energy crunch and choke off an economic recovery when demand rebounds, Richard Jones, deputy executive director of the International Energy Agency, said Tuesday in a presentation at Rice University’s James A. Baker III Institute for Public Policy.

"We believe these developments have diverted world attention from energy security and climate change," he said. "In times of economic hardship, it’s all too easy to lose sight of longer-term concerns."

The IEA’s 2008 World Energy Outlook, compiled in the first half of this year as oil marched toward the $140s, calls for worldwide energy investments of $26.3 trillion through 2030, or more than $1 trillion each year. It also says under current policies, global demand will rise 1.6 percent a year, or 45 percent by 2030.

"We don’t think current worries justify backtracking or delay," Jones said Tuesday. "Investment will be a sound way to increase jobs and get out of the economic crisis we’re in."


Doubt about projects

The Energy Information Administration, which is part of the U.S. Energy Department, expressed similar concern in its Short-Term Energy Outlook, which was released Tuesday.

The agency said lower oil prices generate doubt about the viability of expensive oil- and gas-producing projects outside of the Organization of the Petroleum Exporting Countries, particularly those using unconventional technology or in frontier basins. These include Canada’s oil sands, where several companies have delayed final decisions to move ahead on expansions or new projects.

"If problems in global financial markets lead to delayed investment in existing and new oil fields, then even a short-lived economic downturn could have longer-term ramifications for world oil supply," the EIA said. "This would heighten the risk of a return to a tight supply situation once the world economy and oil demand growth recover."


Accelerating declines

The IEA’s outlook said accelerating declines in current producing oil fields increase the uncertainty. The agency’s analysis of 800 oil fields show decline rates are expected to rise over time, from 6.7 percent today to 8.6 percent in 2030. That amounts to a need for the equivalent of four more Saudi Arabias just to offset decline, then another two to meet future demand.

"It’s almost like you’re on a treadmill, and you have to run faster to stay in place," he said.

Amy Myers Jaffe, an energy fellow at the Baker Institute, said the year’s ups and downs in oil prices and demand debunked several myths that gained strength during oil’s rise. Those included that economies would keep growing rapidly no matter how high oil prices rose and that American drivers were immune to high prices. When gasoline hit $4 a gallon and higher, demand took a dive and energy-efficient cars became a priority.

"The market has now corrected itself based on the fact that prices do cause a contraction in demand," she said.

But the lull is temporary, Jones noted. When economies recover, demand will return, making it all the more critical that investment continues despite the recession. He said that the IEA outlook foresees an average oil price between now and 2015 of $100 a barrel.

"Even though it’s now down to $44 today, given the gyrations of the last year, we’re not prepared to say the average between now and 2015 is wrong," he said.

kristen.hays@chron.com

[TheDude]

Equivalent graphs for the rest of the world can be found at the IEA's Statistics page. Select a region, then the graph for "Evolution of Electricity Generation by Fuel." Most show a contraction of use of oil in the early 80s - permanent demand destruction. The current crunch in the transportation sector will largely be transitory.

[Revi]

I think we are poised on the edge of a new low fossil fuel world. A lot of people who were totally addicted to fossil fuel have begun to find ways of breaking the habit. They aren't driving their SUV's, not towing the RV's and aren't riding their ATV's. Even with gas at $1.75 a gallon the spell is broken. They were yesterday's toys.

If we drop at 9% a year it's not going to be much fun.

Who's going to drill baby drill at $40 a barrel?

[mos6507]

$this->bbcode_second_pass_quote('Revi', 'A') lot of people who were totally addicted to fossil fuel have begun to find ways of breaking the habit. They aren't driving their SUV's, not towing the RV's and aren't riding their ATV's. Even with gas at $1.75 a gallon the spell is broken.

[copious.abundance]

'Bout time to update this thread. Looks like the IEA has done an about-face.

--> Reuters <--
$this->bbcode_second_pass_quote('', '[')b]Global oil demand could fall in 2009: IEA
Mon 8 Dec 2008, 19:23 GMT
By Gabriela Baczynska

POZNAN, Poland (Reuters) - Global oil demand may fall in 2009 if the economies of developing countries slow further, the head of the International Energy Agency said on Monday.

An absolute fall in global demand would be the first for decades but appears increasingly possible as motorists desert their cars and industrial output plummets.

Asked if global oil demand could drop in 2009, IEA chief Nobuo Tanaka said: "It's possible. If the big non-OECD economies like China or India decline further, that is possible."

"Especially in the OECD countries the decline is clear and is getting sharper and sharper. In non-OECD economies like China, India and the Middle East, the oil demand is robust," he added on the fringe of U.N. climate talks in the western Polish city of Poznan.

In the latest in a series of downward revisions, the IEA last week cut forecast growth in global oil demand to about 220,000 barrels per day (bpd) higher than 2008 levels -- far below recent trends of an around 1 million bpd annual increase.

[...]

[yesplease]

$this->bbcode_second_pass_quote('TheDude', 'E')quivalent graphs for the rest of the world can be found at the IEA's Statistics page. Select a region, then the graph for "Evolution of Electricity Generation by Fuel." Most show a contraction of use of oil in the early 80s - permanent demand destruction. The current crunch in the transportation sector will largely be transitory.

[rockdoc123]

$this->bbcode_second_pass_quote('', 'T')hey aren't driving their SUV's, not towing the RV's and aren't riding their ATV's. Even with gas at $1.75 a gallon the spell is broken. They were yesterday's toys.

[ki11ercane]

$this->bbcode_second_pass_quote('dukey', 'A')re the tar sands even viable at $40/barrel? that's a million barrels a day gone ..

[dohboi]

Thanks Tanada. Did you see thisarticle about problems with insuring carbon capture and sequestration facilities? A big leak could be quite disastrous.

I like the organic rather than the high-tech approaches to CCS--native grasses, trees...

At 387+ppm we need to both halt further emissions and start sequestering like mad. Almost none of this is happening (deliberately) as far as I can see, and certainly not at the rate the facts call for.

We're still mostly sleep walking into the apocalypse.

[yeahbut]

$this->bbcode_second_pass_quote('rockdoc123', '')$this->bbcode_second_pass_quote('', 'T')hey aren't driving their SUV's, not towing the RV's and aren't riding their ATV's. Even with gas at $1.75 a gallon the spell is broken. They were yesterday's toys.