Peak Oil is You

Donate Bitcoins ;-) or Paypal :-)

Page added on October 10, 2015

Peak oil round up

2015 Could Be The Year Of Peak Oil

…
I am now more convinced than ever that 2015 will see the peak in world crude oil production. I have very closely studied the charts of every producing nation and my prognosis is based on that study. I see many nations in steep decline and most every other nation peaking now, or in the last couple of years, or very near their peak today. These include the world’s three largest producers, Russia, Saudi Arabia and the USA.

China Peak Oil: 2015 Is the Year

Domestic production looks set to peak, with some profound implications for the world market.

Intense focus on the North American shale boom, Saudi Arabia, and ISIS obscures an important emerging energy trend: China’s oil production is peaking. This has profound implications for the world oil market, because China is not just a massive importer of crude; it is also among the world’s five largest oil producers, trailing only the U.S., Russia, and Saudi Arabia, and virtually neck-in-neck with Canada.

China’s oil industry has delivered impressive oil and gas production growth over the past decade. Yet a range of data and historical analogies increasingly suggest that, at global oil prices between $50-to-$100 per barrel, China’s oil supply capability is plateauing and may peak as soon as this year. Lower or higher prices would accelerate or extend this timing.

US Oil Production Nears Previous Peak

The EIA’s Monthly Energy Review came out a couple of days ago. The data is in thousand barrels per day and the last data point is July 2015.

US consumption of total liquids, or as the EIA calls it, petroleum products supplied, reached 20,000,000 barrels per day for the first time since February of 2008.

Something I never noticed before, consumption started to drop in January 2008, seven months before the price, along with world production, started to drop in August 2008. This had to be a price driven decline. Could the current June and July increase in consumption be price driven also?

Crashing Oil Prices Aren’t Due to an Oil Glut But to Demand Destruction

As I began to mention at the end of the first part of this three-parter, I’ve only just recently come to the conclusion that oil prices aren’t going to have a tendency to rise due to the tightening of supply imposed by peak oil, but to depreciate. This of course flies in the face of the common logic of supply and demand, but when factoring in the method by which the majority of our money is created, a deflationary effect can be seen to come into play. This has taken me an absurdly long time to clue into, for although I’d steadfastly amassed a bunch of pieces (various information), I hadn’t realized they were actually all part of the same puzzle.

With peak oil and fractional-reserve banking being the first two pieces of this puzzle, the third piece that I needed to factor in (which oddly enough I’d already written about) is the fact that money is a proxy for energy.

Will declines in U.S. and Canadian oil production lead to a global decline?

At the beginning of this year I noted that all of the growth in world oil production* since 2005 has come from two countries: the United States and Canada. And, I suggested that since the growth in production in those two countries came from high-cost deposits–tight oil in the United States and tar sands in Canada–that the precipitous drop in oil prices would lead to declines in production in both countries.

I concluded that unless another area of the world suddenly started growing its oil production significantly that those declines would probably result in a worldwide decline in oil production.

Well, declines in the both the United States and Canada have arrived. It will be several months before we can know with any certainty whether those declines will translate into a persistent global decline.

Support For OPEC Production Cut Is Increasing

…
Now the shale producers won’t willingly reduce output, as shale production is made up of many different companies, and not a national company like most global oil producers; but due to the economics of the current oil price environment, many shale oil producers will face bankruptcy next year, and as a result, will go out of business.

The reason being is that in 2016, most oil hedges will expire. These hedges have allowed shale oil companies to stay afloat and achieve cash flow neutrality, despite the decline in oil prices. These hedges have also helped shale oil companies gain access to credit, so they can raise the capital needed to put their wells into production. When these hedges expire, companies will not generate the cash flow needed to meet their covenants, which will in turn bankrupt them, and production from U.S. shale oil wells, will start declining rapidly. This will also dry up the credit markets and prevent any type of quick rebound in shale oil production.

This is why the IEA even estimates that U.S. oil output will start collapsing next year.

US Shale Oil too Expensive, Peaks 1H 2015

According to EIA data, monthly US crude oil production peaked in April 2015 at 9.6 mb/d.

This is When Bonds Go Kaboom!

…
In the energy sector, the bond devastation is even worse.

California Resources – Occidental Petroleum’s spinoff of its oil-and-gas assets in California, a masterpiece of Wall Street engineering – has done nothing but burn investors in its 10 months as an independent company. When I last wrote about it ten days ago, its $2.25 billion of 6% notes due 2024, issued at par to QE-drunk investors in September last year, had plunged to 66 cents on the dollar. Now they’re at 59.5 cents on the dollar.

Chesapeake Energy, the second largest natural gas driller in the US, is also facing the music. Two of its brethren, Quicksilver Resources and Samson Resources, have already filed for bankruptcy. When I last wrote about Chesapeake a month ago, its $1.1 billion of 5.75% notes due 2023 – that in June 2014 had been at 112 cents on the dollar – had plummeted to 70. Now they’re at 67.

Collapse is Inevitable

There has been considerable discussion lately as to whether or not total collapse of the world’t economies will happen in the relatively near future. I think that is the wrong question. Let me explain.

Ecological collapse of the world’s ecosystem is a lead pipe cinch. It is already well underway and instead of slowing down, it is gaining momentum fast.

Read more: Peak Oil Barrel

fuel included

77 Comments on "Peak oil round up"

Plantagenet on Sat, 10th Oct 2015 7:32 pm

Blaming the current global oil glut on demand destruction doesn’t make any sense when global oil demand and oil consumption are at record highs

https://www.iea.org/oilmarketreport/omrpublic/

Nope—the market has been oversupplied. Eventually global production should drop, especially with US TOS production set to fall in the coming year, but Iran is a wild card—if Iran is able to ramp up oil production that will keep the market oversupplied for quite a while longer.

Cheers!

Apneaman on Sat, 10th Oct 2015 8:00 pm

planty, it doesn’t make any sense to you. It’s not acceptable to your strict narrative, so you disregard alternative possibilities. Can’t imagine such a thing -argument from ignorance.

makati1 on Sat, 10th Oct 2015 8:02 pm

Plant, perhaps demand is at a high because of the low low Walmart prices, not actual need. If China wasn’t filling up every container it can find, with the cheap stuff, I doubt that the demand would be there. When/if the prices start going up, you will see that I am correct.

The above list of articles are mostly BS from the usual sources, with a few that are applicable to the current situation. Only the truly intelligent will be able to tell the wheat from the chaff. ‘Flammable liquids’ may not have peaked, but actual petroleum did years ago.

Davy on Sat, 10th Oct 2015 8:07 pm

Planter said “Blaming the current global oil glut on demand destruction doesn’t make any sense when global oil demand and oil consumption are at record highs”

Planter you will admit there is demand destruction going on in the global economy right? If not please explain China and the fed’s misfire on their attempt at normalization. Then Sir Planter is it possible there is a relationship between oil and the global economy if there is demand destruction underway? Record high oil consumption does not indicate a record high global economy right? Sir Planter, these are just a few question I pitch back to you when you strangely say a demand destruction glut does not make sense. Could it be there is something to it? Would you admit something itty bitty to it? If not planter I would have to say you do not make sense.

Plantagenet on Sat, 10th Oct 2015 8:31 pm

The demand destruction hypothesis can be tested by looking at the data. The data shows there is no global demand destruction. The data shows that instead of shrinking global oil demand is still growing. The clear irrefutable evidence for this is that global oil consumption is still growing.

Get it now?

Cheers!

BC on Sat, 10th Oct 2015 8:46 pm

Plant, total world petroleum consumption PER CAPITA is no higher than in 1973-80. 🙂

Since 2009-13, consumption PER CAPITA has accelerated from ~0% to ~0.76%.

But I suspect that you don’t know WHY there has been an acceleration in world petroleum “consumption” PER CAPITA over that particular period, eh? Care to take a guess?

Do you know what has happened to world available net oil exports (ANE) PER CAPITA since 2005-08? What about ANE to total world production and consumption PER CAPITA? Why is that important?

Do you know what percent world petroleum consumption is as a share of GDP and its differential rate of change per capita to GDP? Is it accelerating? Decelerating? Flat? Why is that important?

Do you know what percent world ANE are as a share of GDP? Why is that important?

If you can answer these questions correctly, you will then ACTUALLY understand the global supply-demand dynamic, that there is no global “glut”, the price of oil is not “cheap”, AND why the answers unequivocally confirm that Peak Oil PER CAPITA occurred a decade ago and the structural effects have been bearing down on the world ever since (and why 9/11 occurred, we invaded Afghanistan and Iraq, and all Hell is breaking loose in MENA and Central Asia).

You will also understand why China’s growth is done and India will never become an industrial economy, and neither will Africa.

Davy on Sat, 10th Oct 2015 8:53 pm

Planter you acted like you answered my question by not answering the question because you refuse to acknowledge the question.

GregT on Sat, 10th Oct 2015 8:54 pm

BC,

You’re overcomplicating things with all of those facts. Just repeat after planter, the world is in an ‘oil glut’. It’s much simpler that way. 🙂

Apneaman on Sat, 10th Oct 2015 8:57 pm

I wonder if that sensational unconfirmed report of Turkey shooting down a Russian Jet could be a distraction for some other shit that just went down in Turkey? Nahhh spin doctors would never do such a thing would they?

The deadly politics behind Turkey’s worst ever terrorist attack

“The twin bomb blasts that tore through a peace rally in the Turkish capital on Saturday, killing at least 86 people, are being described as the deadliest attack in the history of modern Turkey.

The bombings targeted a gathering organized in part by the Peoples’ Democratic Party (HDP), one of the country’s leading opposition parties, just weeks before a new round of national elections are scheduled to be held.

It’s unclear at present who is behind the suspected suicide attack, but the bloodshed is bound to exacerbate tensions in Turkey, which has experienced a deepening and deadly polarization since elections in June failed to produce a stable government.”

https://www.washingtonpost.com/news/worldviews/wp/2015/10/10/the-deadly-politics-behind-turkeys-worst-ever-terrorist-attack/

Truth Has A Liberal Bias on Sat, 10th Oct 2015 8:58 pm

Hey Plant did your mom drink booze while you were a baby in her tummy?

makati1 on Sat, 10th Oct 2015 9:02 pm

Plant, what ‘data’? What source? Who do you believe? Or do you just believe what supports your dreams? Just askin’.

I believe what I see and experience daily and what I hear from my friends in other countries who also see and experience reality. I judge what I read and hear by it’s source. Who signs the paycheck? What are they selling? Because, it is ALL about money.

I have no ‘investments’ so I can smile when the stock market casino goes insane. I have no job to lose so unemployment numbers are just numbers, and always fictitious. I own no real estate so I have nothing to lose there. I pay only sales/VAT taxes, no declarable income. I don’t own a car. I don’t owe anyone anything.

I have other resources that should take care of my real needs for as long as I need them. Hopefully for another 15-25+ years if the world holds together that long. I have invested in knowledge, useful skills, and items needed to help others when the SHTF.

Yes, I still get SS and will continue to take it even as it’s buying power continues to shrink like most incomes in the Us. It allows me to add even more items to my preps and the farm. I am aware that it will be frozen at some point and end at another.

When the Us goes down, as it soon will, my connections to it will also end. No loss. And, yes, it will impact the rest of the world, but not as much as some here would like to believe. Perhaps, by then, all of those US IOUs called Treasuries will have returned home and be the cause of the Empires downfall?

I like to pull the ‘exceptionalist American’ chain. They believe that there is some mystical power that will make them survive the SHTF moment better than the rest of the world. So many other empires had the same delusion. But, if you never studied history, you would never know. And most Americans don’t.

So, party on, folks. I’m enjoying the debates here and the world in general. The sunsets over Manila Bay are beautiful and the views from the farm are equally so, in a different manner. I enjoy life. Do you?

makati1 on Sat, 10th Oct 2015 9:10 pm

Ap, Turkey should be watched closely as it is a key to the events in the ME.

As for the Russian plane that was accused of flying into Turkish territory: Was there any mention that Turkey unilaterally decided on a 5 mile wide “No Fly Zone” over Syrian territory? THAT was what the Russians flew over, not Turkey itself. I bet there wasn’t. It also is the zone under which all of the Western sponsored terrorists get their supplies and reserves and have their headquarters. I expect the Russians to not respect such illegal zones in the future as they continue to wipe out Western sponsored ‘assets’.

BC on Sat, 10th Oct 2015 9:21 pm

mak, having lived and worked in Asia, UK/Europe, US, BC, and South America, I often feel as I grow older that I am a man without a country/culture/nation. That leaves me to self-identify with tribe/family and “place”, which is what the vast majority of us do, in any case.

I don’t self-identify with the values and objectives of the Anglo-American imperial project, i.e., “globalization”, and I suspect that neither do the vast majority of Americans if they were asked in the proper framing of the question, rather than a jingoistic, exceptionalist context and leading questions.

http://www.theatlantic.com/politics/archive/2015/10/americans-pessimism-future/409564/

No surprise then why Americans are becoming generally more pessimistic, but note the irony from the article at the link above. The accelerating advances in tech and communications that Americans perceive as a positive are the very thing that is likely to result in tens of millions of us losing paid employment and purchasing power in the next 10-20 years.

The tech advances about which we are so optimistic have resulted in recent years primarily in convenience and novelty rather than a genuine increase in productivity, a portion of which then accrues to earned income for the bottom 90%+ in the form of higher real compensation, purchasing power, savings, and real wealth accumulation.

Boat on Sat, 10th Oct 2015 9:30 pm

Davy,

is it possible there is a relationship between oil and the global economy if there is demand destruction underway? Record high oil consumption does not indicate a record high global economy right?

Well Davy a few of you have developed this narrative. I would argue that demand destruction with oil at $40 is ridiculous except to the producers. Just like there was demand destruction to consumer spending when there was $100 oil for 6 years while the producers and investors made tons of cash. The point is that even at $100 oil the US/world came back after a huge recession. If $40 goes away who will benefit? The producers of course.
did you see 38 million people die like in the 50’s. The world wasn’t collapsing then or now. The world is chugging along at 3-3.5% growth and if $40 oil sticks around a few years it will pick up speed and bring us to climate change faster.

The best answer for the world would be to cut military spending, social spending and work on population control with a view towards sustainability. Live within a budget.

Apneaman on Sat, 10th Oct 2015 9:34 pm

Who knows anything anymore? The biggest propaganda battle the world has ever known is well under way. I’m pretty sure the bombing in the street in Turkey is real – blood, bodies thousands of folks with carera phones. As for the rest, well I can only judge by my knowledge of how propaganda works and the parties recent actions. I know the playbook, but that proves nothing. Liars on all sides.

Here is some more. Is this true?

Moscow’s Jaw-Dropping New Missile Is a ‘Wake-Up Call’ for Washington

The high-tech cruise missiles fired on IS targets from the Caspian Sea were largely unknown to the West. Now that their efficiency has been demonstrated, military experts around the world are shocked.

http://sputniknews.com/russia/20151009/1028291319/Russian-Missiles-Cause-Awe.html#ixzz3oDc5Oluf

Anytime I see the word “shocked” used in this context the red flags go up. I guess it’s possible the western militaries had no idea, but somehow I doubt it. Secrets are rare in the real world. This piece could be 100% bullshit, but I suspect there are some truths and some half truths along with the rhetoric and sensationalism. Most good lies contain some elements truth. I bet there is more propaganda flying around in one week now than in 1 year of the cold war.

Boat on Sat, 10th Oct 2015 9:41 pm

BC, why do you think Americans think like that?

The accelerating advances in tech and communications that Americans perceive as a positive are the very thing that is likely to result in tens of millions of us losing paid employment and purchasing power in the next 10-20 years.

I think American know the power of tech is taking their jobs. I think most Americans are disappointed in our politics and that is why immigration is such a hot button topic.When unemployment is high why bring in millions of people. Disappointed in government spending and national debt. Disappointed in the outcomes of Iraq and Afghanistan. And disappointed with the rest of the world because they are the same idiots.

GregT on Sat, 10th Oct 2015 9:44 pm

Boat said:

“The point is that even at $100 oil the US/world came back after a huge recession.”

Right Boat, that’s why the US/world is still talking about a ‘weak recovery’ seven years later, and the world’s leading economists are talking about another major economic downturn. The world needs 3% growth just to service fiat currencies and that doesn’t even service the debt. We are still in recession Boat, and we are heading towards the biggest depression the world will ever see. One that we will never recover from.

Oh, and seeing as your head is still firmly stuck up your ass, climate change is already here, and it isn’t going away either. Not for thousands of years after both you and I are long gone.

Boat on Sat, 10th Oct 2015 9:51 pm

Apeman,
I am sure most nations know the capabilities of all other nations. Satellites that can read the date on a dime should give you a clue. The million dollar question is which if any countries have the power to take a short or long range missile out of the sky. Am sure they are all working on it. Like the Iron dome in Israel. Just more advanced. The US claims they have a working system and has been deploying them for a few years for Russian/world nukes.

onlooker on Sat, 10th Oct 2015 10:12 pm

Haha so true propaganda is flying around fast and furious. I personally am apt much more to believe some random person blogging or posting then any news organization of any kind.

makati1 on Sat, 10th Oct 2015 10:29 pm

BC, onlooker, GregT, Ap, I agree with your comments.

BC on Sat, 10th Oct 2015 10:53 pm

Boat, immigration is a “selection” (the Power Elite vet and select the CEO of the imperial corporate-state, and we affirm it by casting a ballot) issue because the Establishment opinion-shaping influentials are following orders/the script from the Power Elite who want to use the issue to frame those concerned about immigration and its effects on the bottom 90% working class as bigoted, intolerant, backward, and parochial.

Those who are indifferent or support mass immigration (reserve army of cheap labor, legal or otherwise) benefit from the process.

That is, “globalization”, immigration, “free trade”, and “liberalization” of labor and financial markets are good. Period. No debate necessary (or permitted). If you support these “values”, you’re informed, “educated”, cosmopolitan, and a sophisticated “global citizen”; if you don’t, well, you’re a loser.

Mass immigration and an increasingly multi-cultural, multi-ethic/-racial society historically occurs during imperial decline and one of many precursor conditions to social, economic, and political disintegration and eventual collapse and self-organization along religious, ethnic/racial, linguistic, and socioeconomic lines.

How many large developed countries reflect these conditions? Europe (multi-lingual but culturally rather homogeneous)? China (some problems with ethnic minorities at the edges of the Middle Kingdom)? Japan? Russia (some ethnic/religious conflicts with Muslims)? Mexico? India? Indonesia? Philippines (Mindanao)? Small city-states? Singapore (now experiencing some issue because of a surge of immigration for slave labor)? Hong Kong? Taiwan? South Korea?

Then look at the US and UK (London metro, primarily), and to a lesser extent Canada, as well as Brazil.

If the Aussies succumb to Chinese millionaire/billionaire immigration, they risk becoming a Chinese colony in a generation. But I’m sure the Aussie unreal estate promoters (and Chinese moving in to take their place to serve Chinese immigrants) and Aussie lenders will be more than happy to get rich from the colonization in the meantime.

BC on Sat, 10th Oct 2015 11:26 pm

Boat, reading your comments in recent weeks/months, I suspect that you are not aware that world real GDP per capita has been virtually flat since 2007-08. 50-75% of incremental real GDP per capita growth since then is attributable to China’s growth, which has been grossly overstated since 2009-10, and most especially since 2012-13.

Moreover, world trade per capita has been dramatically decelerating to the point that it is now contracting, which occurred in 2008-10 and 2001-02.

Historically, 5- and 10-year real GDP per capita does not grow with the 5- and 10-year price of oil above $40. Accordingly, the 5- and 10-year prices of oil are at ~$100, whereas the 5- and 10-year rates of real GDP per capita have been well below 1% to ~0%. This has occurred with world oil production per capita down ~3% since 2005, and C+C per capita is not much higher than the level of 2001.

And as short has related often, the net energy density/quality of the marginal world oil supply from US kerogen extraction since 2008-09 is lower and continuing to decline.

If that’s not enough, available world net oil exports (ANE) are down 25-30% per capita since Peak Oil in 2005. IOW, as the largest oil producers grow their populations and economies as a result of $80-$100 since 2008-09, these countries are consuming an increasingly larger share of domestic oil production, leaving a decline ANE per capita for the rest of the world.

This is occurring with the US and China now consuming at least half of all world ANE, if not more, leaving the entire rest of the world to scramble and maneuver for the declining remaining share.

In this context, the absolute level of oil production/supply is highly misleading, in that a majority of the fastest-growing countries (one-third of world GDP) in the world are dependent upon a large majority share of oil consumption from oil imports (100% in many cases) and are facing a declining supply of ANE per capita, which by definition will eventually preclude growth of real GDP per capita, which in turn implies overall world real GDP per capita ceasing to grow and even contracting per capita.

MrNoItAll on Sat, 10th Oct 2015 11:41 pm

BC — That makes perfect sense to me and many others. But the facts you just laid out will be very difficult for some people to understand, whether due to simple minds or to mental blocks — or both! I have also been reading Boat’s comments in recent weeks/months, and I suspect that he falls squarely into the “those facts are difficult to understand” category. Or — there’s yet another category — the one that a former prolific poster going by “Nony” created all for himself. And that would be the “disagreeing just to disagree” category. With Nony gone, Boat has assumed that mantel, along with championing all of the other “major points” that Nony used to comment on. It’s almost as if Nony cloned himself to create a carbon copy named Boat…

BC on Sat, 10th Oct 2015 11:49 pm

http://www.weather.com/series/great-outdoors/video/50-lanes-of-cars-pile-up-on-beijing-highway

shortonoil on Sun, 11th Oct 2015 3:27 am

World petroleum production should have peaked in 2012 at the energy half way point, and the point of maximum affordability. The reason that it didn’t was because of Central Bank policies. Their incessant printing allowed otherwise defunct operators to keep producing. They flooded the market with cheap money that had no real place to go, so it went into high risk investments; like shale.

That has kept production higher than a balanced market would have allowed, and prices crashed from the artificially generated over supply. When Peak arrives has nothing to do with demand, field integrity, or OPEC production cuts. It has to do with how long the CBs can continue to print before they bankrupt the world’s producers from the resulting secondary price collapse. As long as money is available at 0% in unlimited quantities producers will continue to pump, and they will pump until their balance sheets register zero.

http://www.thehillsgroup.org/

theedrich on Sun, 11th Oct 2015 3:49 am

BC, your statements are a lot more inclusive of our general predicament than those of the author of the article above. To me his most convincing point was his last one: “Ecological collapse of the world’s ecosystem is a lead pipe cinch.” In no way can we escape Tainter’s law of civilizational diminishing returns, especially since we keep ignoring the environment-trashing “externalities” on which our “growth” is based.

The current “compassion” madness that is leading Europe (especially Germany) to allow itself to be destroyed by the Mohammedan invasion is yet more evidence of our collective death wish. In North America, refusal to recognize nature’s limits has been the basis of the United States from its inception. A small tidbit recently revealed by some alarmed political agents in California is that that state has to shell out $25 billion per year to support the illegal invaders who “just want a better life.” (Never mind that everyone knows where a large share of the narcotics epidemic is fed from, and that the Hope-n-Changey creature is doing nothing about it.) No wonder the Golden State is turning into a Marxist collective: From each according to his ability, to each according to his need. Guess which side of the “ability-need” teeter-totter is outweighing the other.

Of course, the elites need to maintain their leftist-liberal “Moral Superiority” in order to continue their planeticidal dominance: those who do not agree are, as you implied, by definition “racists,” “bigots,” “homophobes,” “xenophobes,” “Nazis,” and on and on. Since the TV-hypnotized masses swallow all of this on a daily basis, we cannot expect anything other than collapse.

rockman on Sun, 11th Oct 2015 6:28 am

Folks – I suspect some are badly overthinking the situation. Demand destruction is not a stand alone metric just as “reserves” aren’t. How much of an oil/NG deposit can be counted as reserves depends not just on the amount of oil/NG are there in the ground but the price of that commodity. The world just experienced a huge reduction in proved undeveloped oil reserves as a result of the price collapse. A factor that will be undeniable as more reports of reserve reductions come in from US shale player as auditors update their books.

Demand destruction is no different. As pointed out global oil demand is climbing…at the current lower price. If anyone thinks the world would be consuming as much oil next month should prices magically jump back to $100/bbl then IMHO they are truly wasting their time on this site.

Does there appear to be demand destruction at current prices? Yes and no: their are many consumers satisfying their needs at the current price. But there are still hundreds of millions on the planet who can afford very little fossil fuel products based on $50/bbl oil. In fact many can’t afford any at all. Now increase oil to $100/bbl: are there consumers who can afford to by the products they need? Again yes and no. The world was still consuming a lot of oil when prices were that high. But many couldn’t. Just as the number of folks consuming the record breaking production today would significant decrease if oil prices suddenly escalated.

It ain’t rocket science: satisfying demand is a function of BOTH the amount of a commodity available AND its price. Despite the illogical efforts of some here to deny this dynamic the fact remains: demand (what consumers buy…not what they would like to buy) is a function of price. To argue otherwise is childish. Thus demand destruction AND demand growth are not just a function of the available production but the price of that production.

Price increases reduce demand. Price decreases increase demand. But only to the degree consumers can afford that price. Or conversely, demand will rise and fall with the consumers’ ability to afford the price. There is still a great deal of demand destroyed (or denied, if you prefer) today at the current price of oil. Just not as much as if the price were double.

For the most part the laws of supply and demand are still in effect and the market is currently balanced to a fair degree: there is enough production for all the oil DEMANDED by consumers who can afford $50/bbl oil. Just as the market was balanced when oil was $100/bbl: all the consumers who could afford that price had all the oil they DEMANDED.

Davy on Sun, 11th Oct 2015 7:19 am

Ape said – Anytime I see the word “shocked” used in this context the red flags go up. I guess it’s possible the western militaries had no idea, but somehow I doubt it.

Ape Man, I like when you show you don’t like shit any shit. I am not sure if this Russian cruise missile is new and super-secret but I remember reading about one. It is a capable missile for sure but it is nothing new. The problems with cruise missiles are they are expensive. It is much more advantageous to use smart bombs. Cruise missiles are good for shock and awe especially when the enemy’s air defense is being degraded.

The knowhow and the components in all these missiles are mostly a commodity today in this global world. Everyone has the capability of putting together these things. I have read the Russians used these missiles because of their shelf life expiration and a little shock and awe. Otherwise it was huge waste of money for something a pilot and smart bomb could have done much cheaper.

The next step of delivering a range of other attack assets is where the real skill comes in for armies. You can give a 13 year old a sniper rifle but how good is he going to be. All the major powers have quite good capabilities. They vary on the military in question’s focus. That is why when I hear arm chair military experts like dog paw puke his agenda and talk how capable one military is over another I laugh. The same is true on the net. Anyone with a blog can try to look smart. I constantly hear how the US military is a failure. I laugh when I hear this and I know these people are a joke. Dog paw is a joke.

The real military skill is a broad based management of logistics, personnel training, equipment, leadership, and most of all morale. Russians and the US are high on the list of both. The problem with Russia is money and population. The nation is much smaller with both yet they are still highly capable. Russia has come a long way since the war in Georgia.

Davy on Sun, 11th Oct 2015 7:38 am

MR, boat is a good example of a typical global sheeple cornucopian. They are not stupid just not at the level some of us here are. Our focused subject of doom and prep is not taught in school it is a way of life. I have spent my life on this subject but squarely focused for 10 years now “DAILY”. There are many smart people out there in their narrow range of subjects. We are in a world of specialization. Doom and prep is about broad based knowledge focused on the paradigm shift of everything in descent. Systematic issues, foundational commodity understandings, economic issues, and social issues have to be digested together in their interconnected relationships then we must look at our degrading ecosystem and climate in the brew.

You can’t know these things through the global cultural narrative especially through mainstream media. You can’t be a dog paw with an agenda either. We are too connected in too many ways for a decouple. There will be no winners and losers except at the local level. Many of these locals will just get lucky and it will not be anything related to being superior. China sneezes and the fed catches cold is a case in point. The fed talks rate hike and EM markets get nauseous.

Boat is just smart enough to be dangerous so to speak. He is on the simple side like a high schooler getting into college. He is naïve and shallow across the board like many American sheeples. I enjoy him being here it makes for good target practice for many of us and helps us get our doom message out. This message is vital. We can’t change much but we can get some people better prepared. The sooner we get a critical mass of locals understanding some of these monumental issues the better. Our survival is based upon community survival. No individual is going to make it long.

onlooker on Sun, 11th Oct 2015 8:11 am

Wonderfully spoken Davy. Yes the realities of the situation worldwide should be made clear on a site like this. That is why us “doomers’ seek to constantly refute assertions made by the likes of Boat. They are simply bogus and do not see the depth of our situation in all its complexity and inter-relatedness. The very fact that globalization has been so effective to date is now a weakness has that has made us so interconnected. As for survival based on community, well no truer words have ever been spoken. The mantra should be going forward “united we stand, divided we fall”. If for no other reason then too avoid the horrors of war, even though some may actually wish for it secretly.

marko on Sun, 11th Oct 2015 9:54 am

short my thoughts as well.
PRINT BABY PRINT is the reason why things still function in this nonfunctional way

joe on Sun, 11th Oct 2015 10:14 am

Has anyone considered that cheap oil might be the price the Saudis have to pay for US help? The US must have cut a deal. Use cheap oil as a weapon against Russia and friends, we rearm you and keep your puny disloyal army in the fight against a bunch of peasants and shepherds in Yemen.

joe on Sun, 11th Oct 2015 10:18 am

In the future men will have to work with animals AND build furniture AND repair basic machinery, as all our great great grandfather’s did. Few nations will have anything nearly as advanced as steam trains.

BobInget on Sun, 11th Oct 2015 10:32 am

“Onlooker” for board laureate.

BC says consumption is no higher PER CAPATA then in 1970. (world pop doubled since, sorry)

Rockman, makes the common sense argument
consumption goes up and down with price.

Oil, in its many configurations is a wealth creator, not just an instrument of war and leisure. Wintering in a developing nation, Nicaragua, we examples everywhere.

That over-loaded bus bringing vendors and
surfers to markets and beaches for pennies.

Outboard motors powering fishing boats and
ferries. Jitneys making commerce possible
between nearby cities.

School busses, ambulances, cabs, agricultural and earth moving equipment to dig canals, lay pipelines, communication and electrical conduits.

Trucks, trains and airplanes bringing in tourists, teachers and dentists.

Review this partial list. Now, eliminate all services you deem too frivolous for $100 oil.
When you complete that list, kindly recommend replacement energies, (alternatives)

I’ll start;

1) do away with all male surfers .

apneaman on Sun, 11th Oct 2015 11:36 am

Bob, apparently the infrastructure backbone that makes all those things (much of them frivolous) you mentioned possible is not doable at any price per barrel. It’s been degrading for decades. Why is that? Did we just forget? Oh, it slipped our mind? . All the oil in the world will be rendered almost meaningless without the infrastructure. Does Nicaragua make their own buses from scratch? See Bob for the last 40 years or so there has not been enough net energy to keep the infrastructure in shape AND have an ever growing dopamine drip consumer orgy and vacations, sports stadiums, etc. Something had to go. We made our choice. It will never be repaired (just ad hoc band aids) and AGW consequences will speed up the infrastructure destruction – see South Carolina for the latest billion dollar plus hit. Doesn’t matter Bob because apes will be gone in a few generations and all their mighty fossil fuel monuments of self glorification will be swallowed by the planet. Even a rubble pile of the great Pyramid will still be visible in ten thousand years from now when all signs of modernity are long gone.

61,064 Failing Bridges Must Wait as Cities Borrow at Decade Low

http://www.bloomberg.com/news/articles/2015-10-06/61-064-failing-bridges-must-wait-as-cities-borrow-at-decade-low

onlooker on Sun, 11th Oct 2015 12:14 pm

Yes and to compound all this we have to a large degree reached peak everything as per the book by Richard Heinberg. Minerals are more difficult to mine and of poorer quality. Obviously the same with oil, the light sweet crude is fast depleting what is left is the more difficult and expensive to find and process. The low hanging fruit was always more attractive as it was cheaper and more accessible and thus gave us more immediate satisfaction. It really is amazing how all the information about the multitude of ways we are living unsustainably is on the Net. See one of the underlying problems is that we have built our societies so energy based. In so many ways we have been living like their is no tomorrow, using up non-renewable resources and outgrowing the rate of renewal of the renewable resources in particular now in terms of over-population. So basically we have reached as in the famous research “Limits to Growth”

John Orr on Sun, 11th Oct 2015 6:22 pm

Does anyone know what peak is???….this wording is like betting on horses or stocks and shares…like saying, I could be right I could be wrong, I could be right I could be wrong….
No one even knows where the oils comes from…is it animals is it from the core, is it….

GregT on Sun, 11th Oct 2015 6:28 pm

John Orr,

Perhaps a little more reading is in order. Educate yourself before opening your mouth and spreading nonsense. Just because you haven’t taken the time to understand something, does not mean that everyone else hasn’t as well.

John Orr on Sun, 11th Oct 2015 6:37 pm

GT your even more stupid than I thought…been reading this site for a while now and the site before it…. which closed because no date was able to be set there either the web man give up and did some other brain calming promotion…..there is no one can put “a date” on anything especially you!
What date, not peak, are you putting on it then smart ass?

makati1 on Sun, 11th Oct 2015 8:02 pm

John, are you old enough to be on this site? Maybe you should go and do your homework and come back after you get an education.

apneaman on Sun, 11th Oct 2015 8:19 pm

John Orr, it’s you’re not your, you semi literate fucking retard. Let me guess, you’re under 30 and a product of the American education system? Peak waste of resources.

BC on Sun, 11th Oct 2015 8:20 pm

theedrich, yours is one cutting bit of incisive, succinct analysis, brother.

I would add that the quasi- or neo-Marxian progression, if you will, is not an historical, systemic happenstance. The illogic and unsustainability of perpetual growth of human ape population and resource consumption per capita as is required by “capitalism” to ensure ongoing profits and capital accumulation to the capitalist owners reflects many of the critical aspects of the Marxian critique.

But socialism (as it has evolved) requires ongoing growth of capitalist surplus, which in turn requires perpetual growth of affordable net energy extraction per capita. Oops!

Thus, what I refer to as the Anglo-American, hyper-financialized, rentier-socialist, militarist-imperialist corporate-state (I’m sure there is a much more succinct way to describe it) is an historical evolution of “capitalism”-cum-socialism (the evolutionary Schumpeterian “socialism” in the context of technocratic state-capitalism that is now the global norm in the US, UK, EZ, Japan, Russia, and China), which continues to evolve into whatever comes next as the system adapts to the increasing scale and succession of existential systemic crises.

John Orr on Sun, 11th Oct 2015 8:20 pm

Another save us, get out of the problem makati1 response, don’t see what date are you going to try putting on it….you can’t even spell your name with a capital….

BC on Sun, 11th Oct 2015 8:29 pm

@apnea: Let me guess, you’re under 30 and a product of the American education system? Peak waste of resources.

😀 😀 😀

I would propose nominating posters for daily, weekly, monthly, and annual moron or dumba$$ awards, but I would be concerned I would win too many of my share. 😀

BC on Sun, 11th Oct 2015 8:48 pm

@short and all:

https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=2705

https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=2708

https://app.box.com/s/rvlhbckx959xahjysa30zwyallimx0qb

As ridiculous as this sounds, “money” has become “tight” since late 2014 to date, as the velocity and acceleration of “money” to private economic activity decelerates and contracts at recession-like rates as in 2008, 2001, and the early 1980s.

IOW, the acceleration of the circulation of investment, revenues, profits, wages, and household income is contracting significantly YoY, resulting in the decelerating growth of final sales/demand.

https://app.box.com/s/cik3teki4u11tj7erkxqh1t1lw0eayvj

And the tightening of “money” liquidity is manifesting in a widening of risk spreads, again, as in 2008 and 2001.

John Orr, (younger?) brother, stick around and take some time to read the more balanced, thoughtful, analytical, empirical contributions. You just might learn something and be inspired to likewise contribute something of your own for the benefit of the rest of us incorrigible, curmudgeonly duffers. 😀

BC on Sun, 11th Oct 2015 9:00 pm

Bob, without increasing net energy PER CAPITA, the world can’t profitably, and thus indefinitely sustain, the growth PER CAPITA of the primary, secondary, and higher-order value-added global production chain.

In fact, if one follows the BEA’s industry requirement costs (as only irredeemable geeks such as yours truly does), the US reached the cyclical peak of industry requirement costs, and thus gross output, in mid-2013 to mid-2014, and we’ve been in a pre-recessionary deceleration since to date.

IOW, as short has been arguing in different language and representative data, we’re past the point at which surging unprofitable kerogen production permits sufficient growth of gross (including the energy and energy-related transport sectors) AND value-added (GDP) output per capita in real terms.

https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=272n

https://research.stlouisfed.org/fred2/graph/fredgraph.png?g=20RS

If we can’t grow gross output and profitable industry requirement costs, then we can’t afford to grow value-added (GDP) output in real terms per capita, dominated by low- or no-productivity activity in gov’t, financial services, dis-ease care, and “education”.

rockman on Sun, 11th Oct 2015 9:06 pm

John – More specifically do you understand that date of global PO is not predictable? Of course anyone can guess when it might be but that’s essentially nothing more than an opinion. It can only be known as an historical bit of data. Just as the US PO date in the early 70’s. Of course the recent increase in US production almost established a new PO date about 4 decades later. Thus one has to be rather far into the future to look back and call the global PO date.

OTOH so what? The date of global PO is not very relevant to the lives of anyone. Access to and the price of oil along with the condition of the various economies are what’s important…not some circle drawn on a calendar decades from today. If that’s not clear then I suggest greater participation here until it begins to make sense.

apneaman on Sun, 11th Oct 2015 9:06 pm

theedrich, are you sure the Mohammedan invasion is any worse than what’s already there? At the most 1% are capable of critical thinking and practicing even a modicum of impulse control. American corporate consumer culture has spread across the planet and infected every country like a fast growing toxic fungus. Using the end of WWII as a starting point, that means it only took 70 years to homogenize the desires of the majority of the species. They all want to live in the suburbs own the same cars, phones, frankenfoods – everything. The consumer Borg. Mindless apes who’s sole purpose is to breed and experience as many prefabricated dopamine drips as possible. I saw some of the footage of the angry swarms of wild eyed refugees in Europe trying to get on a train. Looked exactly like the rapicious swarms of American and British consumers waiting for the consumer temple doors to open on Black Friday.

apneaman on Sun, 11th Oct 2015 9:38 pm

BC, you are far too modest and almost shame me with your level of patience and diplomacy with the, uh, unenlightened …………..almost;)

makati1 on Sun, 11th Oct 2015 10:43 pm

Ap, good wrap-up of the situation. The curse of consumerism has grown here in the Ps also. A result of being a colony of the Us for 50 years and still a quasi-colony with it’s leaders educated/brainwashed in the States. Not to mention the two to three million or so that work there and send money back to the Ps. Although many of those are coming home.

They see what is happening and don’t want to be a part of it or caught up in the coming chaos. My partner’s sister is bringing her daughter back here to go to school. She doesn’t want her exposed to American high school students/drugs/sex. Can’t blame her. For now, her daughter attends a private school in San Francisco.

Thanks goodness the income levels for most Filipinos are too low to participate in the Western stupidity. Most are still just at subsistence or slightly above. There will be about 10% of the population that will really have problems when the SHTF as they will lose their city condos and perks and jobs. But most will adjust and many will not even notice. Can’t say that about in the West and especially the US.