Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on May 4, 2020
Oil flows spell deep depression
Energy is not just one commodity among many in the economy; it is the commodity. Without energy, nothing gets done. And, oil is not just one form of energy in the energy commodity complex; it is the energy source upon which our modern way of life depends. In fact, it is the main energy source running through the arteries of the global economy.
Far from being a boon to the world, ultra-low oil prices signal that the global economy is flat on its back—even worse, flat on its back with two broken legs.
Petroleum geologist and consultant Art Berman recently detailed the problem in this piece. Berman is the man who accurately predicted—starting way back in 2008—the persistent losses that shale oil and gas would produce for the companies that extracted them. The shale industry continuously vilified Berman for his analysis over the next decade, even as the industry was in the process of blowing 80 percent of investors’ capital as of last year. With the arrival of the coronavirus, the coup de grâce has just been delivered to a shale oil and gas industry that was already on its knees.
Perhaps the most important thing to understand about the current oil “glut” is that it is not merely the result of producing too much oil for an economy humming on all cylinders. It is primarily the product of a coronavirus-infested economy in which demand has dropped 20 percent in just a few weeks. As Berman points out, estimated U.S. oil consumption has returned to a level not seen since 1971.
Energy is the very basis for economic activity. There is now 20 percent less oil flowing through the veins of the global economy, and economic activity is tightly correlated with oil consumption. Ergo, economic activity must be down significantly around the planet. Coal consumption is declining as well, but it is harder to measure in real-time. This piece suggests significant declines in Chinese coal consumption. And the clearing air in China and in practically every city around the globe suggests a lot less burning of everything that we call fuel.
It may seem that as soon as lockdowns end (and they have already ended in China), the world economy will pick up and quickly return to its old pace. Our recent experience will somehow be remembered as two-month leave of absence in retrospect.
One of the indications of whether that is happening will be energy consumption worldwide. For comparison the U.S. Energy Information Administration reports that the decline in worldwide consumption of refined petroleum products between 2007 and the end of 2009 was 1.5 percent, the period now called the Great Financial Crisis (GFC). Total world energy consumption during the same period actually increased by 0.2 percent (though it declined by 1 percent between 2009 and 2010). We are currently looking at energy consumption declines of 20 times that for oil and probably many times that for total energy consumption. The latest consumption numbers for U.S. refined petroleum products do not provide any reason for optimism.
It is not at all clear how under these circumstances we could now recover to our previous level of economic activity more quickly than we did after the GFC as some people are predicting.
People and companies buy and use energy (and the products energy is needed to produce) when they are confident about their prospects. I am doubtful that the confidence needed to lift the world economy to new heights will return anytime soon. Our energy picture leads to this conclusion and also suggests that the world economy has further contraction ahead before even a slow recovery can begin.
9 Comments on "Oil flows spell deep depression"
Theedrich on Tue, 5th May 2020 6:59 pm
The œdipal U.S. is going insane. Incapable of facing reality, using quasi-religious rationalizations to justify its crimes, arrogant beyond words, a bribe-ocracy run by twisted internationalists and parasites, it has shot its wad.
Most scientists adamantly deny the existence of the paranormal or of any cosmogonic Mind. They are, frankly, lemming-like idiots savants who have never studied philosophy and are terrified of losing their government grants and peer approval. While claiming to be “scientific,” they simply refuse to look at the obvious evidence for a different sphere of being which underlies the universe.
In reality, the safety mechanisms which Mother Nature has deliberately built into evolution on a finite planet are now becoming engaged. She will not allow absurdity to destroy billions of years of life. This prohibition is the ultimate rule of ecology (οἰκολογία, literally, “science of the household”): Thou shalt not overwhelm the carrying capacity of thine environment.
Homo sapiens, with America in the lead, has refused to acknowledge this rule. It was America that ignited Communism, to which it is now beholden. (See The War That Didn”t End by Jay Winter in The American Legion magazine, November 2018, pp. 48ff.) And it cannot extract itself from the vast tarpit it has dug.
The ChiCom virus and its successors will be with us forever. They are going to eviscerate the willingly genosuicidal U.S. For, whom the gods would destroy, they first make mad.
printbabyprint on Wed, 6th May 2020 12:18 am
Theedrich don’t blame only America we are all the same. What do you think that any other nation would behave differently than America if they were the super power .
Anonymouse on Wed, 6th May 2020 12:57 am
Sorry print, nice try with the logical fallacy there, but no cigar. The fact is, no one could behave worse than amerika because that is quite impossible. No one could matach amerikas greed, violence, corruption, or rampant hypocrisy. Or its militarism.
On a slightly more serious note, no one else is even attempting to become a ‘superpower’, much less one modeled after amerika. The face that amerika spends more money and resources than the next 10 nations COMBINED is proof that rampant militarism is not a big priority for all the ‘would’ be superpowers out there. That is another fallacy. And most of the nations just below the uS are either uS puppets, or are forced to spend what they do, in order to deter amerika from igniting another world war on some bogus pretext or another. None of the other ‘major’ powers stir the pot, meddling, and ignite conflict like amerika. The ones that do stir up trouble, the uK, France, Canada, Australia, Ukraine, Poland, Japan etc, are almost always following amerikas lead.
So much for that theory of yours print….
makati1 on Wed, 6th May 2020 2:04 am
Anon, the US is the Number One terrorist country, bar none. Has been for well over 100 years. A plundering, murdering, arrogant group of people who want all they can get from the lowest Amerikan bum to the billionaires. Few even know what is happening in the rest of the world, and don’t care, as long as the goodies flow in from their “colonies”.
This little virus shake-up, whether planned or accident, is going to change all that “exceptional/indispensable bullshit faster than getting a Big Mac and fries at a McDonalds drive-thru. I am waiting to see just how much it will change here in the Philippines, but it has to be better here than on the US. We are still way down the ladder from Amerika so the landing should be easier. We shall see. Have a great day!
printbabyprint on Wed, 6th May 2020 2:54 am
Anony, if you really believe that there is any difference between a greedy American boss and greedy Russian boss or whoever you are wrong.
Abraham van Helsing on Wed, 6th May 2020 4:30 am
Never waste a good (Corona) crisis and use the destruction of the fossil fuel industry to push the renewable energy transition.
Hydrogen news from the Netherlands, as an example:
https://nptprocestechnologie.pmg.be/nl/dossier/EPTbe1913S07_00?project=EPTbe2019E01
In Veendam there is a 1 MW electrolyser operational that is fed by 5000 solar panels, run by natural gas giant GasUnie (Shell-Germany has 10 MW). GasUnie and German energy giant RWE are working on a 100 MW plant. Parallel GasUnie is working with Chemical multinational Nouryon (former Dutch Akzo-Nobel) on another 100 MW project.
More long-term plans for GigaWatt electrolysis, fed by the GigaWatt large offshore wind parks in the North Sea:
https://nptprocestechnologie.pmg.be/nl/dossier/EPTbe2002W01_00?project=EPTbe2019E01
5 potential locations: Rotterdam, North Sea canal, Geleen (Chemelot), Zeeland en North-Nederland (GasUnie territory).
The anti-techies here will call this a “pipe-dream” (which to a certain extent it is indeed.lol), but what they really express with that is to underline the declining significance of the US empire.
https://nptprocestechnologie.pmg.be/nl/dossier/EPTbe1703S21_00?project=EPTbe2019E01
By 2023 one of the three blocks of the natural gas-fueled, Mitsubishi-built, Magnum-power plant in Eemshaven will have been converted towards hydrogen fuel. It will be the first in the world to do so. It will be operated first by hydrogen produced in Norway in the conventional (fossil fuel) way, but later replaced by hydrogen from the intended multi-GW electrolysers, fed by offshore wind power.
Anonymouse on Wed, 6th May 2020 9:06 am
Yea, those ‘RUSSIAN boses’ eh? Not only are they super-greedy just like an amerikan , they are super scary too. Best to stick with our amero-jewish overlords. They are way better than RUSSIAN boses. Our bosses hand out free candy to children, help little old ladies cross the street, and only engage in corruption for good causes. Like spreading freedom and democracy. Or owning everything not nailed down and charging you for every little, or major, necessity of life.
Zeke Putnam on Wed, 6th May 2020 12:26 pm
I have followed Berman for yrs. In fact, he’s the only one I follow. I come here to see if there’s anything worth reading, which, not often, there is.
printbabyprint on Wed, 6th May 2020 2:18 pm
If this is the way the things should function, let have overlords, you think one are better than other. I think we must change or we are screwed.