Peak Oil is You
Donate Bitcoins ;-) or Paypal :-)
Page added on October 12, 2015
The Peak Oil Crisis: When?
For those following the world oil production situation, it has been clear for some time that the only factor keeping global crude output from moving lower is the continuing increase in U.S. shale oil production mostly from Texas and North Dakota. Needless to say once the fabled “peak” comes, oil and gasoline prices are certain to move higher triggering a series of economic events – most of which will not be good for the global economy.
Thus the key question is just how many more months or years will production of U.S. shale oil (more accurately call light tight oil) continue to grow. Many have answers to this question ranging from the “next year or so” on out the middle or end of the next decade. Some forecasts as to time remaining until the “peak” arrives are politically tinged. No politician, business manager, or even investor wants to hear that serious economic problems affecting their lives may be only a few years away. Fortunately for these folks, there are many forecasters available to spin stories about how “technology” will enable US shale oil production to continue on into the dim future of the 2020’s – which most of us really can’t comprehend or plan for.
Usually missing from optimistic estimates for future U.S. shale oil production is any discussion of just how fast production from fracked wells declines. Most fracked wells are adequate or at least economic producers for three years or so, after which their production is so small that they need to be replaced or reworked to keep a meaningful amount of production going. As shale oil production grows larger and larger, more and more wells will have to be drilled and fracked just to keep production level. At some point there will be a cross over between new wells coming on stream and old wells going out of production so output will start to slip. The EIA recently noted that for North Dakota to increase its oil production by 20,000 barrels a day (b/d) next month, it must bring 94,000 b/d of new production online. At Texas’s Eagle Ford basin, it will take 152,000 b/d of new production next month to increase net production by 31,000 b/d.
There is no doubt that the shale oil drilling industry has made many significant technological advances in recent years. Multiple wells are now being drilled from a single drilling pad – foregoing the need to move drilling rigs and setting up all the expensive infrastructure needed to frack shale wells. For a while shale oil drillers were drilling and fracking longer wells which reduced the cost per barrel. Now we hear that drillers are increasing production per well by pumping more fracking materials down each well and some are saying this will be enough to offset any decline in prices.
Currently US shale oil production is about 3 million b/d and in June output increased by about 100,000 b/d. About half of US shale oil production comes from North Dakota where winter conditions are so harsh that production has been falling during the winter months.
The two major forecasting agencies, Washington’s EIA and Paris’ IEA, are both more pessimistic than is generally known for they both foresee US shale oil production leveling off as soon as 2016. The reason for this is that drillers will simply run out of new places to drill and frack new wells. While new techniques of extracting more oil from a well are possible, there is need to look closely at the costs of these techniques vs. the potential payoff.
The shale oil situation in Texas is somewhat different than in North Dakota for there you have much better weather and two separate shale oil deposits. The recent growth in Texas’s shale oil production has been much smoother than in storm-prone North Dakota and has been increasing at about 44,000 b/d each month. So far as can be seen from the outside of the industry, production in both states will continue to grow for at least another year or two – but then we will be at 2016.
The government has never gotten around to publishing the assumptions that go into the forecast that U.S. shale oil production will stop growing circa 2016. The biggest difference between EIA/IEA and independent analysts is the government forecasters do not see a precipitous drop in shale oil production following the peak. Instead they see a period of flat production followed by a gentle decline stretching well into the next decade. Such a gentle end to the shale oil “bubble” can only assuage fears of a calamity. This projection on a gentle end to U.S. shale oil is at variance with outside forecasters who note that shale oil wells are pretty well gone in three years and simply do not see where the oil to maintain production levels will be coming from for another 10 or 15 years after the peak.
Independent analyses of U.S. shale oil generally come to the same conclusion that production will peak in the 2016-2017 timeframe, but as noted above see a much faster decline than does the government.
There are however, other factors that could become the primary cause of world oil production peaking in the next few years. The first is the turmoil in the Middle East. A lot of oil production in the region has dropped off line in recent years for political reasons and Iraqi production is endangered. The spread of militant Islam could eventually threaten other major producers in the region as could the Arab-Israeli standoff.
A more recent development having serious long-term implications for the oil industry is the growing disparity between the cost of producing a new barrel of oil from the Canadian oil sands or deep below the ocean and the selling price of that oil. A recent study points out that many planned oil production projects are simply not economical at today’s oil prices which have been relatively stable for the past five years as costs continued to soar. Oil companies are already cutting back on new drilling projects which will have little impact on current production, but will be very significant five years or so from now.
66 Comments on "The Peak Oil Crisis: When?"
Plantagenet on Mon, 12th Oct 2015 7:51 pm
As long as oil production continues to grow more rapidly then global oil demand, we’ll continue having an oil glut. Of course the lower oil prices resulting from the oil glut are curtailing new exploration and drilling, and eventually oil production will fall, ending the oil glut.
The oil glut may well end in 2016, but Iranian oil is a wildcard, as the Iranians can potentially greatly increase their oil exports over the next couple of years.
Cheers!
Boat on Mon, 12th Oct 2015 8:20 pm
Plant,
Wall Street speculators are always ahead of production.I bet prices will start rising by the 1st qt of 2016 overall with a lot of volatility. And this will happen as storage fills.
Davy on Mon, 12th Oct 2015 8:21 pm
The global economy is in no position to experience oil price gyrations. The goldilocks range is compressing for both producers and consumers. How can that end well?
Folks, most of you had a good meal today. I didn’t because I fast on Monday and Thursdays. Most of you don’t think twice about food. How many of you say grace when you eat? I don’t mean Christian grace. What I mean is think about the food you are eating and be thankful.
Peak oil is peak food. If you remove oil from the equation you are removing food. If enough oil is removed that will lead to food insecurity and hunger. It is as simple as that. We are very close to hunger games.
Boat on Mon, 12th Oct 2015 8:31 pm
Davy,
Thankful or not I earn my food. Many of our problems would go away if everybody did.
Davy on Mon, 12th Oct 2015 8:37 pm
Boat, none of us earn our food. It is from natures bounty and our lives from her acquiescence. When you think you are your own master that is when you will be humbled.
How are you going to earn that food boater when there is little food to earn? Boater have you made any plans for that day or do you think it will never come. I hope you are right but I see you as a blind man to the coming storm.
makati1 on Mon, 12th Oct 2015 8:39 pm
Boat, I agree. Fasting is required if you are a Mormon. First Sunday of every month you fast two meals and give the money you saved to the Welfare fund that helps needy members (Was on that side of the system also in the 80s). Been there done that for too many years, until I saw the lies behind that curtain also and walked away.
I’m still a high priest in the Mormon Church as far as I know. No notice of excommunication … yet, which means, by their rules, I am still married to my Ex and she cannot remarry in the Church without my consent. LOL
apneaman on Mon, 12th Oct 2015 8:58 pm
Boat, your food is highly subsidized.
Anonymous on Mon, 12th Oct 2015 9:03 pm
Having performed relatively simple mathematics (holding production rates steady at 2010 levels, assuming discovery levels gradually shrink, the mathematical timing of peak oil should be between 2030-2035. Then things will get really interesting and perhaps extremely violent :\
You can really just guestimate to that period of time based on the graph shown here. We’ll burn through all our pre-1960 oil discoveries by then.
http://www.forbes.com/pictures/efee45fmdh/oil-production-v-oil-discovery-2/
Plantagenet on Mon, 12th Oct 2015 9:08 pm
Makatai is claiming to be a Mormon Bishop? Hahahah!
Next he’ll claim to be Mitt Romney.
GregT on Mon, 12th Oct 2015 9:27 pm
@boat,
“Thankful or not I earn my food. Many of our problems would go away if everybody did.”
Good for you Boat, I for one did not realize that you were a farmer. I thought that you were one of the regular working stiffs contributing to the demise of our one and only planet. The planet that provides all of our food for us. Sorry man, guess I had you pegged all wrong.
apneaman on Mon, 12th Oct 2015 9:28 pm
planty, how the fuck would you know what religion Mak was apart of? The key word there is was O master of reading comprehension. Do you know how many people play around with different religions? Fuck are you ever dumb.
Plantagenet on Mon, 12th Oct 2015 9:40 pm
@apey
I know you are dumb, but apparently you can’t even read.
Please check out Mak’s post above. He claims to be “a high priest” in the Mormon church. If you don’t understand any of the words in the post, just ask and I’ll help you understand what you are reading.
Cheers!
PS—your potty mouth is overflowing again—if flushing does’ t work then please use a plunger—things are seriously backed up in there and its overflowing everywhere.
GregT on Mon, 12th Oct 2015 9:54 pm
@planter,
How the fuck would you know what religion mak took part in? And how the fuck would you know what position he attained in that religion unless he told you so. In case you haven’t noticed mak does not believe this to be a good thing. Give your head a shake girl, you’re making even less sense tonight than you normally don’t.
Plantagenet on Mon, 12th Oct 2015 9:58 pm
@lil Greggie:
Why don’t you empty your potty mouth onto Apey and he could could empty his potty mouth onto you and then the two of you could enjoy your limited vocabularies together?
Cheers!
makati1 on Mon, 12th Oct 2015 9:59 pm
Plant, being a high priest in the LDS Church only means you have reached the highest level of priesthood. Actually a significant percentage of active male members are ordained into the high priesthood eventually if they follow the rules. I did serve in the Bishopric with 5 bishops over 20 years as Clerk/Exec. Secretary. Got to see behind the curtain so to speak. That’s why I walked away.
You should do a bit of research before you put someone down. It only makes you look bad when you are wrong. Try any search engine on here and get educated.
GregT on Mon, 12th Oct 2015 10:04 pm
“It only makes you look bad when you are wrong.”
In case you haven’t noticed mak, planter is seldom correct in her twisted assumptions, and almost always wrong. You’d think that she would have some semblance of self respect, and would have tired by now of embarrassing herself so often. A very bizarre example of a human being if there ever was one. Her shrink must be having a heyday.
Plantagenet on Mon, 12th Oct 2015 10:14 pm
@Mak
Thanks for the clarification.
I wasn’t putting you down for being a Mormon—I was completely amazed when you said you once served as a high priest in the Mormon Church. I did indeed make a joke about it, but I don’t think thats surprising given that the misanthropic and anti-American persona you usually project here is about as far from Mormonism as could be. OK—I see now that you really are —or were—-a devout Mormon.
Most Mormons I’ve met are very patriotic, and you have to admit you don’t exactly fit that stereotype.
Cheers!
GregT on Mon, 12th Oct 2015 10:21 pm
Patriotism isn’t about flag waving lil’ planter, it is about holding your government and your institutions accountable.
You are confusing patriotism with nationalism, as many people often do.
frankthetank on Mon, 12th Oct 2015 10:24 pm
Local sand mines here in Wisconsin are cutting jobs/idling workers.
BC on Mon, 12th Oct 2015 11:07 pm
http://www.fao.org/worldfoodsituation/csdb/en/
Davy and all, speaking of food, the growth rates per capita of world cereal production and stocks continue to decelerate from the 2006-08 high, with utilization per capita having caught up to decelerating production, which previously occurred in 2008-09.
https://app.box.com/s/xt8fhcxp62igds328g7q6mzorpytq9pw
With the increase in industrial agriculture using fossil fuels and petrochemicals worldwide, net available oil exports having fallen 20-25% per capita since 2005-09, and global trade no longer growing, at the trend rates of production, stocks, and utilization, cereal utilization has peaked per capita and will commence an inexorable decline by no later than 2017-18.
However, a global recession as I anticipate will increase the downward slope of the utilization curve per capita as soon as next year.
http://wsm.wsu.edu/researcher/wsmaug11_billions.pdf
If one wants to know where the most acute and persistent effects of Peak Oil and peak food utilization per capita will occur, see the link above.
Note the percent of income spent on food in the so-called breadbasket of Eurasia. Is it coincidence that Putin and the Ukrainians are in conflict? MENA? Central Asia? Pakistan?
What will surprise most now and hereafter will be how precariously close to widespread food and utilization insecurity are parts of Eastern Europe, China, India, Indonesia, Vietnam, and the Philippines.
http://www.fao.org/worldfoodsituation/foodpricesindex/en/
The falling price of food at Peak Oil and declining net available oil exports (and feedstocks and petrochemicals) at overshoot and no growth of trade implies that cereal production will continue to decelerate per capita, and the regions most vulnerable to food and utilization insecurity are at ongoing risk of food shortages at local prices that populations can afford in order to sustain subsistence.
These are the areas in which economic, social, and political instability are most likely, and we’re already seeing the emerging structural effects occurring.
Yet another example of Peak Oil, overshoot, LTG, and EOG resulting in, and coinciding with, demand destruction and the predictable economic, social, and political consequences.
But Plant sees a “glut”, so “it’s” all good. 🙂
apneaman on Tue, 13th Oct 2015 12:44 am
BC, Annual income spent on food. Do you have any idea how much of that is low in the rich countries because of higher incomes and how much is because of Ag subsidies?
As AGW and ocean acidification worsen, that will put even more stress on the food supply.
apneaman on Tue, 13th Oct 2015 1:15 am
Global marine analysis suggests food chain collapse
October 12, 2015
“This analysis combines the results of all these experiments to study the combined effects of multiple stressors on whole communities, including species interactions and different measures of responses to climate change.”
The researchers found that there would be “limited scope” for acclimation to warmer waters and acidification. Very few species will escape the negative effects of increasing CO2, with an expected large reduction in species diversity and abundance across the globe. One exception will be microorganisms, which are expected to increase in number and diversity.
From a total food web point of view, primary production from the smallest plankton is expected to increase in the warmer waters but this often doesn’t translate into secondary production (the zooplankton and smaller fish) which shows decreased productivity under ocean acidification.
“With higher metabolic rates in the warmer water, and therefore a greater demand for food, there is a mismatch with less food available for carnivores—the bigger fish that fisheries industries are based around,” says Associate Professor Nagelkerken. “There will be a species collapse from the top of the food chain down.”
Read more at: http://phys.org/news/2015-10-global-marine-analysis-food-chain.html#jCp
MrNoItAll on Tue, 13th Oct 2015 1:32 am
I’m pretty sure we’re living the Peak Oil Crisis right now, and have been for a while. Astronomical unpayable debt issuance has obscured the grim reality and bought a little time. But look at leading economic indicators — international trade, commodities prices, employment, corporate profit margins, budget chaos in oil exporting countries, capital flight from EMs — the list goes on and on. Everything seems to be heading down on a steep decline, swirling into the deflationary vortex of recession and economic shrinkage. The good news is, we’re just in the beginning stages of the oncoming Peak Oil Crisis. The bad news is, it is going to get a LOT worse.
joe on Tue, 13th Oct 2015 4:32 am
Their answer is to simply spread crapitalism to the last edges of Asia, TAP and TTIP is crapitalisms last throw of the dice, one last hurrah as peak oil creeps up.
So called freetrade between third world Asian nations and freetrade of service’s/utilities between the US and EU will hollow out the US middle class totally leaving the Americans with nothing left except bowing to Wall St and the FED and the ending of the second amendment right to bear arms to secure freedom from domination by the very powers seeking to control the American people. I don’t own a gun but I realise that without the threat of the right to use force America would have become like Russia long ago. Strongmen have often ruled in America, but they rarely considered ideas like Putins not because they are special but because Americans would react with such hostility that they would rise up in revolt if a US President acted the way Putin does or the British government does. People like Obama need to be the bridges between people and communities, compromising and deal making. Putins of the world don’t make deals, it’s their way or nothing, sadly the US is playing HIS game right now.
apneaman on Tue, 13th Oct 2015 4:51 am
About that second amendment right. Just how bad does it have to get to exercise it to throw off tyranny? Seems like bearing arms is the only constitutional right that has not been legislated away. Me thinks that the freedom loving loud mouths are full of hot air. Too fucking comfortable and lacking in courage to do anything but talk tough and keep massaging their guns while they watch Mel Gibson’s “The Patriot” for the 47th time on TBS.
Davy on Tue, 13th Oct 2015 6:19 am
Folks, you all are not taking this food thing seriously. You had your square meals yesterday as always. Most of you don’t know food insecurity, hunger, and or famine yet, that is what awaits us. This awaits rich and poor. The poor are going to die by the bushel in the third world. In the rich world people will be amazed to see store shelves empty. Many seasonal foods and luxury foods are going to disappear. Many highly processed foods that are fossil fuel dependent will be gone.
This is going to happen for three reasons. Climate change is going to hit hard with drought and other disruptions. Peak oil dynamics will play its part decaying the industrial Ag infrastructure. The economic descent will disrupt the key variable of distribution and trade structures. All this as population growth pressures continue. Food is the weak link to stability. It just amazes me more of you do not think about this predicament and take action. The whole subject of doom and prep revolves around food.
The “BEST” action that could be taken now by society is make a world changing move back to the land into permaculture farming. This needs to be done now with the proper tools being mass produced while we can. The small farm infrastructure needs to be rebuilt. We need more train service for example. We will still have to move food around. We need a critical mass of people who can produce food surplus and cover their own needs. People will need to be educated how to produce food.
We can’t end fossil fuel industrial agriculture immediately. This will have to be a hybrid affair. This will be so disruptive it will end the economy as we know it. With a pie getting smaller you pay for these things by doing less somewhere else. That somewhere else needs to be consumerism and leisure. We need to end bad attitudes and lifestyles that manifest themselves today in all those discretionary activities all of us are accustomed to. This includes specialty foods and drink.
We also need to put as much altE into the mix as we can. I am not talking the large industrial altE sources that feed into the centralized grid. I am talking altE for the end user who will be running a small farm. We need maximum productivity from the permaculture farms. AltE is essential for lighting, refrigeration, maintenance, and processing.
The only way this can be done politically and economically is by force. This is not going to be agreed to. The people’s rights will be trampled on. Large absentee land owners will have to give up their land. Large farms were necessary will have to be broken up. Again some areas will have to stay large and industrial because of their importance. We can’t just end industrial agriculture. We can do a hybrid of the two even on the same land.
The way you make this happen is by controlling the distribution of food and fuel. These are the tools of economic and political persuasions. Once food and fuel is rationed per the needs of this new economic and political arrangement changes will be forced. This will not be without high costs socially. This will mean changes to everything including food. The transition will leave us with less food. Things like the medical field will be greatly reduced. The service industry will be decimated. Accountants need to be farmers.
You laugh at what I said but that is what is needed and required to avoid widespread hunger and famine. Of course this will not happen but this is the only viable option. Our food choices will diminish as food availability changes from climate change, peak oil dynamics, and economic collapse. Food insecurity will develop as food distribution breaks down. When peak oil dynamics hits with a vengeance industrial Ag will be under severe pressure.
I had 1000 acre industrial Ag farm that produced corn and soybeans in 2000. I have a permaculture cattle and goat farm now. I do the doomstead garden and other food activities. I am a doomer and prepper. All this has convinced me everything now must focus on what I just described above. I am giving you the plan B all of you are lusting for. There is no other way.
This is real folks and it is near. Discount this reality at your own peril. Yesterday I fasted the whole day. I also worked out. This is my conditioning for what is ahead. We are going to have less food and more work. Get ready and get off your ass.
makati1 on Tue, 13th Oct 2015 6:20 am
Plant, apology accepted. But my advice to take a minute and do a quick search on something you are not sure of before you put someone down. A person that has live 71 years can have been a lot of different things and learned a lot about life by living it. I do not lie. It takes too much effort to try to remember what lie you tell to whom. The truth is easier. Always open to explaining my comments if asked.
Yes, Mormons are usually very patriotic. Part of their church indoctrination also. But it is more of a corporation than a religion. It uses family ties to enforce their dogma. I was a Protestant for the first 24 years of my life and them tried Mormonism for the next 35 years. Was sealed to my wife in the Washington DC Temple, where my youngest daughter was married. Sealed in the Mormon Church means ffor all time and eternity, not until death do you part. lol
But, I again moved on when that proved to be phony and my wife harped on my inactivity as she was still totally brainwashed. Now I am an atheist. Makes my life so much easier. And I do mot worry about death. It will be like turning off the light. Nothing.
As for my “anti-American” position, I enjoy pulling the flag waver’s chain. And the Empire deserves some negative publicity to counter their world wide propaganda. I am a doomer, I guess. Ignore me if you don’t like the message. I’ll try to slack off, but I won’t promise.
Davy on Tue, 13th Oct 2015 6:59 am
Dog paw says “I do not lie.” Dog paw your life is a lie. Your comments are a lie of agenda for death lust. If you want to be a normal commenter here stop your excessiveness and be responsible. If not I am going to hound you everyday
Atheism is a joke as is organized religion with anyone that thinks they have figured “IT” out. I have figured you out and you are extremely afraid of death. You always talk about how long you are going to live and how healthy you are. You might be I have never seen you but where you live is not healthy. You are still in your seventies heading into an uncertain and calamitous time. That cannot point to long life for someone old like you. It is bad enough for someone in there 50’s like me.
You can enjoy pulling my chain if that what rocks your boat. I enjoy hopping for your violent and horrible death. I enjoy daily diminishing, discounting, and discrediting your lies and agenda. There is a place for your message. I have no problems with responsible comments here but if you wish me dead and my neighbors dead then you are fair game.
I often hear others here irritated by my hate for you well fuck them. I rarely hear them ask you to tone down your death lust for America. You are doing this board a disservice. You and others can get your message out responsibly and curtesy to other commenters here. There are others here who just ignore you fine but that is how Hitler was born. Dog paw you are of the same mold as a Hitler or a Stalin. You would end the US if it were your ability and choice.
steve on Tue, 13th Oct 2015 10:04 am
Man you losers sound like a bunch of losers…..whine whine whine….fucking kill
Davy on Tue, 13th Oct 2015 10:22 am
Steve, listen to yourself asswipe joining the crowd. If you don’t like it ignore it or show some nuts and chose sides because that is what this comes down to. If you agree with genocidal thoughts on this board come out and say so. If you like responsibility and curtesy then say so. Just blaming and complaining about blaming and complaining puts you in the same catatagory. Oh, Steve I believe you are Canadian. As a Canadian can you say something to your country man from Montreal. Maybe he will listen to you.
BC on Tue, 13th Oct 2015 11:03 am
@apnea: BC, Annual income spent on food. Do you have any idea how much of that is low in the rich countries because of higher incomes and how much is because of Ag subsidies?
Good question, ap. I don’t know the answer, but your inference appears sound.
http://www.wsj.com/articles/should-washington-end-agriculture-subsidies-1436757020
http://www.ers.usda.gov/data-products/ag-and-food-statistics-charting-the-essentials/food-prices-and-spending.aspx
http://www.gallup.com/poll/156416/americans-spend-151-week-food-high-income-180.aspx
http://blogs.scientificamerican.com/plugged-in/10-calories-in-1-calorie-out-the-energy-we-spend-on-food/
Some data to ponder at the links above. The $20B in direct ag subsidies does not include the direct and indirect subsidies for the embedded fossil fuel energy throughout the ag production, transport, processing, and storage structure, of course.
Plantagenet on Tue, 13th Oct 2015 11:31 am
@MAK
Thanks for the mini-biography. Really—you’ve lived quite an odyssey there.
I first visited Salt Lake City when I was about 12. My family did the tourist thing at Temple Square and I have to confess the whole Mormon thing seemed like a big cult/scam to me even then.
Congrats on your finding a tropical paradise in the Philippines.
Cheers!
Davy on Tue, 13th Oct 2015 11:33 am
When I had my 1000 acres corn and soybean farm in 2000 it was government payments that allowed me to barely make it. I was able to make my land, equipment, and working capital loans with the additions of the government payments. They were not much. If I remember correctly I was getting $30K a year. Prices were low then with the potential for increases from China and ethanol in the future. That is why I got in then. I bought some land cheap. I also had access to equipment through the business I was in. I got out 4 years later with an ass kickin. I worked for 4 years for free well not free I did get an education. I did not lose money but all I got was an education.
It is my opinion it is the largest of the large that are raking in the profit from the government. Even with largish farmers getting subsidies these are bled off to the big guys who themselves mange to get subsidies by all the various tools they have at their disposal. These big guys are milking the farmers who get subsidies then also getting subsidies themselves. It truly is a failed system.
I am not up on Europe enough to comment but Europe is a mess also but for different reasons. At least Europe still has decent quality foods. The US as moved towards industrial foods. The gmo’s, antibiotics, and growth hormones are a crime against nature. I am truly and fully against the American farm system. It is a complete failure that we are stuck with for now. We cannot just switch to a new system without serious disruptions to the food chain.
I just got a $20K cost share payment for an intensive grazing system. This is highly beneficial to the environment and lowers the need for fossil fuel imputes by lowering the need for hay. The system is flawed but not completely. This latest program I got in is a good deal for everyone. I might add I still am spending $30K of my own money on this grazing system. I am doing it right and making it to last. The animals will benefit from better nutrition and good drinking water.
P.S. – BC, I copied your comment above “BC on Mon, 12th Oct 2015 11:07 pm” to my notes, thanks for the references.
ghung on Tue, 13th Oct 2015 11:42 am
SNAP (‘food stamps’) is the largest indirect subsidy to our industrial agriculture system; about $74 billion in 2014.
Since direct subsidies to US agriculture are only a tiny fraction of GDP, far less than things like military spending, and since agriculture is uniquely vulnerable to things like the vagaries of weather and climate change, it’s probably a good idea that they continue. Many farmers couldn’t stay in business without things like crop insurance, especially considering that modern farming is often an exercise in juggling debt, year to year. The majority of the money spent on food in the US doesn’t go to the farmer anyway.
Are there abuses? Show me any govt. program involving billions of dollars that doesn’t include some abuse. Agriculture is a bit like healthcare. As long as it’s largely controlled by huge corporations, there’s a tendency toward extortion. At least food prices haven’t risen as fast as healthcare.
Then, again, with the horrible eating habits and food choices found in the US, maybe agricultural subsidies should be considered as an indirect subsidy for the healthcare system, eh? The two biggest sections in my local super market, by far, are sugar water (sodas, etc,) and ice cream. That’s not the farmer’s fault.
HARM on Tue, 13th Oct 2015 11:58 am
Considering that world and domestic production just keeps on rising (thanks to shale/tar-sands/fracking), it’s looking like George Monbiot may have been right to throw in the towel after all.
Peak Oil will eventually happen, of course. But it looks like that day is much, much further off than I imagined just a couple years ago. I may even be dead and buried before it arrives.
http://www.theguardian.com/commentisfree/2012/jul/02/peak-oil-we-we-wrong
http://static.cdn-seekingalpha.com/uploads/2014/12/2/162115-14175347994921741-Tom-Armistead_origin.jpg
rockman on Tue, 13th Oct 2015 12:35 pm
” Needless to say once the fabled “peak” comes, oil and gasoline prices are certain to move higher triggering a series of economic events…” Once again another clueless person who doesn’t understand the dynamics. Whatever year we actually hit global PO we could be seeing lower prices then we have today. Or a price twice as high. The price of oil has never been solely determined by the volume of production.
ghung on Tue, 13th Oct 2015 12:56 pm
Regardless of price, the question I have is: Will the world ever see higher oil production than in 2014/2015? Considering costs of production and the overall demand paradigm, I’m thinking it isn’t likely. Whether there’s a long plateau, a fat volatile tail, or a crash, it’s clear that this cheap oil abundance isn’t the economic shot-in-the-arm so many folks predicted. too many other POD drags on the economy.
shortonoil on Tue, 13th Oct 2015 12:59 pm
Is Tom referring to this crisis:
http://www.zerohedge.com/news/2015-10-13/theres-no-more-fat-be-cut-desperate-oil-producers-cut-salaries-save-mission-critical
Not only has oil’s ability to power the economy fallen to a level where much of it can no longer pay for its own extraction, Central Bank policies seem determined to drive a couple extra nails in the other end of its coffin.
The price of oil at this point in the cycle should be about $68:
http://www.thehillsgroup.org/depletion2_022.htm
The world woke up to $47 this morning. In their frantic attempt to save the banking system they are apparently willing to kick the petroleum industry under the bus. That may seem a little short sighted but bankers have never been known to play much of a role as visionaries. Neither have they been very staunch supporters of self sacrifice!
Unfortunately, one of them is going to go. It will either be a big slice of the fiat monetary system, or what remains of the petroleum industry. We would rather have the oil, but Wall Street is having a love affair with their free money.
http://www.thehillsgroup.org/
Rob on Tue, 13th Oct 2015 1:25 pm
I’ve been thinking that the one of the markers for peak oil may be price volatility. I think price is more variable now than 20 years ago. When we reach peak there will more intense price pressures in both directions: upward due to cost increase and supply decrease and downward pressure due to weakened demand following higher prices.
shortonoil on Tue, 13th Oct 2015 1:52 pm
“I’ve been thinking that the one of the markers for peak oil may be price volatility.”
There has been considerable discussion of that point in this thread:
http://peakoil.com/forums/the-etp-model-q-a-t70563.html
The long term trend for prices is down. The oil age ends when producers can no longer afford to produce oil. That event is a thermodynamic certainty. The volatility you refer to could originate from Central Bank policy. Since they have no idea what they are going to do, we don’t either!
BC on Tue, 13th Oct 2015 1:54 pm
HARM and Rob, world Peak Oil per capita is ten years behind us fading in the rear view mirror. You are driving along looking for what you perceive to be Peak Oil that you will never see.
But there’s no point in turning around to go back. Just keep driving and enjoy the Peak Oil-free scenery. 😀
Lawfish1964 on Tue, 13th Oct 2015 2:49 pm
An article from 2012 talking about frac’ing as the miracle that will stave off peak oil. Not very useful now.
rockman on Tue, 13th Oct 2015 3:04 pm
Rob – More volitile now the 20 years ago? How about less volitile then it was 30 years ago: from 1980 – 86 the inflation adjusted price of oil fell from $118/bbl to less than $17/bbl. Percentwise a far greater drop then we just experienced. How about the same 50% drop from early to late 90’s as we just had?
Not that I disagree with your idea that the PO dynamic induces volitility. But that we’ve been dealing with that relationship for 40 years now. Pull up the chart of the inflation adjusted price of oil since the end of WWII and it becomes obvious. As I’ve pointed out numerous times the oil patch had recognized the PO path we were on more than 4 decades ago.
rockman on Tue, 13th Oct 2015 3:07 pm
Fish – And if one really understood the dynamics the frac’ng/shale boom brought on by record high oil prices was actually a harbinger of PO.
HARM on Tue, 13th Oct 2015 3:42 pm
@BC,
While there are a million subtopics and nuanced debates that collectively constitute “peak oil theory”, the basic concept as established by M. King Hubbert 60 years ago has remained the same: Peak Oil is still the hypothetical point in time when the global production of oil reaches its maximum rate, after which production will gradually decline. It’s not per capita production or consumption –it’s aggregate global production.
Now we can still argue whether or not “tight oil” from tar sands/shale and “condensates” (from fracking & LNG) really qualify as “oil”, but the rest of the world has already accepted them as such and moved on. By that expanded and commonly accepted definition, world “oil” production is still rising and higher than it has ever been, so cannot have already peaked.
shortonoil on Tue, 13th Oct 2015 4:10 pm
“@BC,
While there are a million subtopics and nuanced debates that collectively constitute “peak oil theory”, the basic concept as established by M. King Hubbert 60 years ago has remained the same: Peak Oil is still the hypothetical point in time when the global production of oil reaches its maximum rate, after which production will gradually decline.”
Without ZIRP, and the $13 trillion in excess liquidity that the CBs have dumped into to the market production would have gone into decline several years ago. That policy has kept production advancing at about half its historic rate. It has also contributed significantly to the low prices that are breaking the industry. The increased production that you are referring to has been pathetic at best. It has just barely compensated for the increased energy it has taken to produce the oil. That is, none of that increased production has contributed to the growth of the general economy.
Using a one size fits all approach to world oil production is like using a one size fits all approach to girdles. It leaves your ass hanging out.
HARM on Tue, 13th Oct 2015 5:06 pm
@shortonoil,
Just for the record, I am not a Peak Oil denier. I only post sporadically compared to some of the regulars here (Planty, BC, Apneaman, rockman, ghung, etc.), but I used to follow The Oil Drum regularly and am well versed in key P.O. concepts such as the EROEI, the Export Land Model and the law of diminishing returns.
That said, I think it’s pretty clear that the broad consensus that the global production peak of conventional+tight+condensates would happen around 2005 was off by at least a decade (and counting). That’s the problem with making predictions, especially about the future. Doesn’t mean it’s not going to happen eventually –it will– but just not as soon as I and so many others believed.
I am frankly amazed at how far that tight oil and fracking have managed to kick the P.O. can down the road, plus the fact that U.S. production is poised to equal (or surpass) the previous 1971 peak. Just goes to show you that no matter how solid your science and reasoning, no model can perfectly account for every possibility. Ditto for the ability of the Fed and other central banks to keep inflating real estate, stocks and other assets to the moon.
No, the laws of thermodynamics have not been repealed, but clearly there was more slack and economically recoverable supply in the world than we initially thought. So… time to revise those estimates and assumptions.
GregT on Tue, 13th Oct 2015 5:31 pm
I think that if you asked Harm, most here would agree that global peak production of conventional oil did happen in or around 2005. Tight oil and condensates, are not the same things and IMO should mostly not be lumped in with oil. Also, if all of that new production that came on line after ~2007 was economically affordable, then why is it that much of that production now being shut in, many of those companies are in such dire financial straits, and economies around the world continue to struggle with economic recovery?
Davy on Tue, 13th Oct 2015 5:53 pm
Thanks Greg for saving me the key strokes. Harm has a bag over his or her head.
Apneaman on Tue, 13th Oct 2015 5:55 pm
The only broad consensus of peak oil I recall from 2005 is that of so called conventional. 2005 is a good starting point for the “shale boom”. If the ridiculous amounts of debt are not paid back in full, then I would strongly argue the definition of “economical”. How much was made on just flipping leases? Economical under the new 21st century definition. I bet Jamie Dimon and the major shareholders of TBTF bank stock think their business model is economical. I think you’re right in that no model accounted for the lengths they would go to, (lying, cheating, externalizing citizens health and the environment) to kick the can. I don’t see why they can’t go further – they’re already trimming the fat by reducing wages and bonuses. TPTB don’t give a shit about thermodynamics or anything else. They will push it down to 1:2 if they think it will keep them in power. Maybe there will be a shale bail. How about nationalizing all fossil fuels then drafting the workers into the military in the name of national security? Keep their families in a secure camp. Why not? If you understands the nature and history of power then you know anything will be attempted to keep it. It may not work, but that never stops them from trying. Go ahead, laugh. Many things that are accepted as normal today would have been laughed at 20 -30 years ago by most people, like TBTF bank bailouts, the patriot act, NDAA, ZIRP for 7 plus years and much more.