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Page added on April 28, 2016
Debacle at Doha: The Collapse of the Old Oil Order
Sunday, April 17th was the designated moment. The world’s leading oil producers were expected to bring fresh discipline to the chaotic petroleum market and spark a return to high prices. Meeting in Doha, the glittering capital of petroleum-rich Qatar, the oil ministers of the Organization of the Petroleum Exporting Countries (OPEC), along with such key non-OPEC producers as Russia and Mexico, were scheduled to ratify a draft agreement obliging them to freeze their oil output at current levels. In anticipation of such a deal, oil prices had begun to creep inexorably upward, from $30 per barrel in mid-January to $43 on the eve of the gathering. But far from restoring the old oil order, the meeting ended in discord, driving prices down again and revealing deep cracks in the ranks of global energy producers.
It is hard to overstate the significance of the Doha debacle. At the very least, it will perpetuate the low oil prices that have plagued the industry for the past two years, forcing smaller firms into bankruptcy and erasing hundreds of billions of dollars of investments in new production capacity. It may also have obliterated any future prospects for cooperation between OPEC and non-OPEC producers in regulating the market. Most of all, however, it demonstrated that the petroleum-fueled world we’ve known these last decades — with oil demand always thrusting ahead of supply, ensuring steady profits for all major producers — is no more. Replacing it is an anemic, possibly even declining, demand for oil that is likely to force suppliers to fight one another for ever-diminishing market shares.
The Road to Doha
Before the Doha gathering, the leaders of the major producing countries expressed confidence that a production freeze would finally halt the devastating slump in oil prices that began in mid-2014. Most of them are heavily dependent on petroleum exports to finance their governments and keep restiveness among their populaces at bay. Both Russia and Venezuela, for instance, rely on energy exports for approximately 50% of government income, while for Nigeria it’s more like 75%. So the plunge in prices had already cut deep into government spending around the world, causing civil unrest and even in some cases political turmoil.
No one expected the April 17th meeting to result in an immediate, dramatic price upturn, but everyone hoped that it would lay the foundation for a steady rise in the coming months. The leaders of these countries were well aware of one thing: to achieve such progress, unity was crucial. Otherwise they were not likely to overcome the various factors that had caused the price collapse in the first place. Some of these were structural and embedded deep in the way the industry had been organized; some were the product of their own feckless responses to the crisis.
On the structural side, global demand for energy had, in recent years, ceased to rise quickly enough to soak up all the crude oil pouring onto the market, thanks in part to new supplies from Iraq and especially from the expanding shale fields of the United States. This oversupply triggered the initial 2014 price drop when Brent crude — the international benchmark blend — went from a high of $115 on June 19th to $77 on November 26th, the day before a fateful OPEC meeting in Vienna. The next day, OPEC members, led by Saudi Arabia, failed to agree on either production cuts or a freeze, and the price of oil went into freefall.
The failure of that November meeting has been widely attributed to the Saudis’ desire to kill off new output elsewhere — especially shale production in the United States — and to restore their historic dominance of the global oil market. Many analysts were also convinced that Riyadh was seeking to punish regional rivals Iran and Russia for their support of the Assad regime in Syria (which the Saudis seek to topple).
The rejection, in other words, was meant to fulfill two tasks at the same time: blunt or wipe out the challenge posed by North American shale producers and undermine two economically shaky energy powers that opposed Saudi goals in the Middle East by depriving them of much needed oil revenues. Because Saudi Arabia could produce oil so much more cheaply than other countries — for as little as $3 per barrel — and because it could draw upon hundreds of billions of dollars in sovereign wealth funds to meet any budget shortfalls of its own, its leaders believed it more capable of weathering any price downturn than its rivals. Today, however, that rosy prediction is looking grimmer as the Saudi royals begin to feel the pinch of low oil prices, and find themselves cutting back on the benefits they had been passing on to an ever-growing, potentially restive population while still financing a costly, inconclusive, and increasingly disastrous war in Yemen.
Many energy analysts became convinced that Doha would prove the decisive moment when Riyadh would finally be amenable to a production freeze. Just days before the conference, participants expressed growing confidence that such a plan would indeed be adopted. After all, preliminary negotiations between Russia, Venezuela, Qatar, and Saudi Arabia had produced a draft document that most participants assumed was essentially ready for signature. The only sticking point: the nature of Iran’s participation.
The Iranians were, in fact, agreeable to such a freeze, but only after they were allowed to raise their relatively modest daily output to levels achieved in 2012 before the West imposed sanctions in an effort to force Tehran to agree to dismantle its nuclear enrichment program. Now that those sanctions were, in fact, being lifted as a result of the recently concluded nuclear deal, Tehran was determined to restore the status quo ante. On this, the Saudis balked, having no wish to see their arch-rival obtain added oil revenues. Still, most observers assumed that, in the end, Riyadh would agree to a formula allowing Iran some increase before a freeze. “There are positive indications an agreement will be reached during this meeting… an initial agreement on freezing production,” said Nawal Al-Fuzaia, Kuwait’s OPEC representative, echoing the views of other Doha participants.
But then something happened. According to people familiar with the sequence of events, Saudi Arabia’s Deputy Crown Prince and key oil strategist, Mohammed bin Salman, called the Saudi delegation in Doha at 3:00 a.m. on April 17th and instructed them to spurn a deal that provided leeway of any sort for Iran. When the Iranians — who chose not to attend the meeting — signaled that they had no intention of freezing their output to satisfy their rivals, the Saudis rejected the draft agreement it had helped negotiate and the assembly ended in disarray.
Geopolitics to the Fore
Most analysts have since suggested that the Saudi royals simply considered punishing Iran more important than lowering oil prices. No matter the cost to them, in other words, they could not bring themselves to help Iran pursue its geopolitical objectives, including giving yet more support to Shiite forces in Iraq, Syria, Yemen, and Lebanon. Already feeling pressured by Tehran and ever less confident of Washington’s support, they were ready to use any means available to weaken the Iranians, whatever the danger to themselves.
“The failure to reach an agreement in Doha is a reminder that Saudi Arabia is in no mood to do Iran any favors right now and that their ongoing geopolitical conflict cannot be discounted as an element of the current Saudi oil policy,” said Jason Bordoff of the Center on Global Energy Policy at Columbia University.
Many analysts also pointed to the rising influence of Deputy Crown Prince Mohammed bin Salman, entrusted with near-total control of the economy and the military by his aging father, King Salman. As Minister of Defense, the prince has spearheaded the Saudi drive to counter the Iranians in a regional struggle for dominance. Most significantly, he is the main force behind Saudi Arabia’s ongoing intervention in Yemen, aimed at defeating the Houthi rebels, a largely Shia group with loose ties to Iran, and restoring deposed former president Abd Rabbuh Mansur Hadi. After a year of relentless US-backed airstrikes (including the use of cluster bombs), the Saudi intervention has, in fact, failed to achieve its intended objectives, though it has produced thousands of civilian casualties, provoking fierce condemnation from UN officials, and created space for the rise of al-Qaeda in the Arabian Peninsula. Nevertheless, the prince seems determined to keep the conflict going and to counter Iranian influence across the region.
For Prince Mohammed, the oil market has evidently become just another arena for this ongoing struggle. “Under his guidance,” the Financial Times noted in April, “Saudi Arabia’s oil policy appears to be less driven by the price of crude than global politics, particularly Riyadh’s bitter rivalry with post-sanctions Tehran.” This seems to have been the backstory for Riyadh’s last-minute decision to scuttle the talks in Doha. On April 16th, for instance, Prince Mohammed couldn’t have been blunter to Bloomberg, even if he didn’t mention the Iranians by name: “If all major producers don’t freeze production, we will not freeze production.”
With the proposed agreement in tatters, Saudi Arabia is now expected to boost its own output, ensuring that prices will remain bargain-basement low and so deprive Iran of any windfall from its expected increase in exports. The kingdom, Prince Mohammed told Bloomberg, was prepared to immediately raise production from its current 10.2 million barrels per day to 11.5 million barrels and could add another million barrels “if we wanted to” in the next six to nine months. With Iranian and Iraqi oil heading for market in larger quantities, that’s the definition of oversupply. It would certainly ensure Saudi Arabia’s continued dominance of the market, but it might also wound the kingdom in a major way, if not fatally.
A New Global Reality
No doubt geopolitics played a significant role in the Saudi decision, but that’s hardly the whole story. Overshadowing discussions about a possible production freeze was a new fact of life for the oil industry: the past would be no predictor of the future when it came to global oil demand. Whatever the Saudis think of the Iranians or vice versa, their industry is being fundamentally transformed, altering relationships among the major producers and eroding their inclination to cooperate.
Until very recently, it was assumed that the demand for oil would continue to expand indefinitely, creating space for multiple producers to enter the market, and for ones already in it to increase their output. Even when supply outran demand and drove prices down, as has periodically occurred, producers could always take solace in the knowledge that, as in the past, demand would eventually rebound, jacking prices up again. Under such circumstances and at such a moment, it was just good sense for individual producers to cooperate in lowering output, knowing that everyone would benefit sooner or later from the inevitable price increase.
But what happens if confidence in the eventual resurgence of demand begins to wither? Then the incentives to cooperate begin to evaporate, too, and it’s every producer for itself in a mad scramble to protect market share. This new reality — a world in which “peak oil demand,” rather than “peak oil,” will shape the consciousness of major players — is what the Doha catastrophe foreshadowed.
At the beginning of this century, many energy analysts were convinced that we were at the edge of the arrival of “peak oil“; a peak, that is, in the output of petroleum in which planetary reserves would be exhausted long before the demand for oil disappeared, triggering a global economic crisis. As a result of advances in drilling technology, however, the supply of oil has continued to grow, while demand has unexpectedly begun to stall. This can be traced both to slowing economic growth globally and to an accelerating “green revolution” in which the planet will be transitioning to non-carbon fuel sources. With most nations now committed to measures aimed at reducing emissions of greenhouse gases under the just-signed Paris climate accord, the demand for oil is likely to experience significant declines in the years ahead. In other words, global oil demand will peak long before supplies begin to run low, creating a monumental challenge for the oil-producing countries.
This is no theoretical construct. It’s reality itself. Net consumption of oil in the advanced industrialized nations has already dropped from 50 million barrels per day in 2005 to 45 million barrels in 2014. Further declines are in store as strict fuel efficiency standards for the production of new vehicles and other climate-related measures take effect, the price of solar and wind power continues to fall, and other alternative energy sources come on line. While the demand for oil does continue to rise in the developing world, even there it’s not climbing at rates previously taken for granted. With such countries also beginning to impose tougher constraints on carbon emissions, global consumption is expected to reach a peak and begin an inexorable decline. According to experts Thijs Van de Graaf and Aviel Verbruggen, overall world peak demand could be reached as early as 2020.
In such a world, high-cost oil producers will be driven out of the market and the advantage — such as it is — will lie with the lowest-cost ones. Countries that depend on petroleum exports for a large share of their revenues will come under increasing pressure to move away from excessive reliance on oil. This may have been another consideration in the Saudi decision at Doha. In the months leading up to the April meeting, senior Saudi officials dropped hints that they were beginning to plan for a post-petroleum era and that Deputy Crown Prince bin Salman would play a key role in overseeing the transition.
On April 1st, the prince himself indicated that steps were underway to begin this process. As part of the effort, he announced, he was planning an initial public offering of shares in state-owned Saudi Aramco, the world’s number one oil producer, and would transfer the proceeds, an estimated $2 trillion, to its Public Investment Fund (PIF). “IPOing Aramco and transferring its shares to PIF will technically make investments the source of Saudi government revenue, not oil,” the prince pointed out. “What is left now is to diversify investments. So within 20 years, we will be an economy or state that doesn’t depend mainly on oil.”
For a country that more than any other has rested its claim to wealth and power on the production and sale of petroleum, this is a revolutionary statement. If Saudi Arabia says it is ready to begin a move away from reliance on petroleum, we are indeed entering a new world in which, among other things, the titans of oil production will no longer hold sway over our lives as they have in the past.
This, in fact, appears to be the outlook adopted by Prince Mohammed in the wake of the Doha debacle. In announcing the kingdom’s new economic blueprint on April 25th, he vowed to liberate the country from its “addiction” to oil.” This will not, of course, be easy to achieve, given the kingdom’s heavy reliance on oil revenues and lack of plausible alternatives. The 30-year-old prince could also face opposition from within the royal family to his audacious moves (as well as his blundering ones in Yemen and possibly elsewhere). Whatever the fate of the Saudi royals, however, if predictions of a future peak in world oil demand prove accurate, the debacle in Doha will be seen as marking the beginning of the end of the old oil order.
55 Comments on "Debacle at Doha: The Collapse of the Old Oil Order"
Survivalist on Thu, 28th Apr 2016 9:09 pm
Here’s an interesting take on KSA and economic involvement in Egypt.
https://www.geopoliticalmonitor.com/saudi-arabia-comes-to-the-rescue-of-the-egyptian-economy/
And another
http://crudeoilpeak.info/egypt-budget-and-current-account-deficit-can-saudi-arabia-bail-out-cairo
“The external financing needs for 2015/16 are US$ 25.1 bn. Compare that to the Saudi aid pledge of US$8 bn over 5 years!”
Saudi Arabia won’t last much longer. They’ll piss away what they have left on propping up local despots and tyrants. They’re not a smart bunch in KSA these days. People that win for a long time at a rigged game get stupid.
Rick Bronson on Thu, 28th Apr 2016 9:20 pm
There are 2 heavy weights here (Russia & Saudi Arabia) and 2 medium weights (Iraq & Iran). They all have 1 thing in common.
They can produce conventional vertically drilled crude oil at a price much lower than the Shale (USA) and Sands (Canada/Venezuela).
They all have the common objective.
Drive both Shale & Sands oil out, so they will keep pumping up as much as possible.
And we see the descent of the Shale oil already.
Plantagenet on Thu, 28th Apr 2016 11:10 pm
The world’s population is still increasing. India and China are still growing their economies, and still using more oil. I don’t quite see how that is consistent with a prediction of imminent “peak oil demand.” More people using more oil means MORE oil demand.
Cheers!
makati1 on Thu, 28th Apr 2016 11:24 pm
Plant, have you noticed that the Chinese incomes are dropping also? I would suspect that demand there is by the government stockpiling the cheap stuff in preparation for the coming war with the Us.
India is growing a bit, but it is a nation of poor people, not car owners so I doubt oily demand will grow much.
The Ps is 100,000,000 strong, yet they only import ~400,000 bbls/day the last time I checked. That is less than 1/40th the Us uses daily. But the Ps is still growing. They just don’t need as much of that oily stuff to do it.
When China stops filling up everything that can hold petroleum, the drop in ‘consumption’ will be heard around the world.
Northwest Resident on Fri, 29th Apr 2016 12:33 am
“More people using more oil means MORE oil demand.”
More people without enough money to buy the products that oil is used to produce combined with more people without enough money to fill up their tank for happy motoring means LESS oil demand.
Which is exactly what is happening.
The more digital debt they inject into the world economy to keep BAU limping along, the more “wealth” is sucked from the 99% and parked in offshore accounts of the 1%.
And that’s the way it works.
Northwest Resident on Fri, 29th Apr 2016 12:40 am
And less shale fracking and less Canadian tar sands drudging and less offshore drilling due to totally unworkable economics (plus excessive pollution) means SIGNFICANTLY LESS oil demand.
But please feel free to think like a complete idiot and believe that MORE oil demand is the reality.
apneaman on Fri, 29th Apr 2016 12:43 am
“More people without enough money to buy the products that oil is used to produce combined with more people without enough money to fill up their tank for happy motoring means LESS oil demand. ”
More than a million people in UK living in destitution, study shows
Research by Joseph Rowntree Foundation finds 668,000 households unable to afford essentials such as food, heating and clothes
“More than a million people in the UK are so poor they cannot afford to eat properly, keep clean or stay warm and dry, according to a groundbreaking attempt to measure the scale of destitution in Britain.
A study by the Joseph Rowntree Foundation (JRF) found that 184,500 households experienced a level of poverty in a typical week last year that left them reliant on charities for essentials such as food, clothes, shelter and toiletries.
More than three-quarters of destitute people reported going without meals, while more than half were unable to heat their home. Destitution affected their mental health, left them socially isolated and prone to acute feelings of shame and humiliation.
Although the study could not demonstrate that destitution had increased in recent years, it said this would be a plausible conclusion because of related evidence showing austerity-era rises in severe poverty, food bank use, homelessness and benefit sanction rates.”
http://www.theguardian.com/society/2016/apr/27/million-people-uk-living-destitution-joseph-rowntree-foundation
UK Population: 64.1 million (2013)
peakyeast on Fri, 29th Apr 2016 1:59 am
Our politicians here in Denmark would bring out the whip – those people must be lazy since they dont have money to buy food. They dont need help – they need to feel the pain…
I dont agree with that position, but thats how those problems are tackled today. Back in the good ol times they would actually try to help those same people.
IOW: Job creation by whipping the slaves… Not very likely to succeed.
Plantagenet on Fri, 29th Apr 2016 2:02 am
@Mak
The care culture is alive and well in both China and India. The economy of both countries is growing, and the number of rich people in both countries is growing. For instance, for the first time more SUVs were sold in China last year then in any other country.
More people driving more SUVs means more gas consumption, even if the driving is being done in China.
Cheers!
makati1 on Fri, 29th Apr 2016 4:22 am
Plant, says who? The Chinese government? The Us government? Wall Street? Facts not propaganda, please. Meaning, a reference NOT from a government or financial advisory source.
I know you are heavily invested in the oily stuff, but it blinds you to the economics of the story. China (maybe) is growing 2-3% in real numbers or maybe it too is declining like the Us. What government publishes negative news these days? None. That China is stockpiling oil is in preparation for the coming financial war and maybe even shooting war with the Us. The Chinese know that the dollar is worthless and it’s days are numbered and they are turning them into real things of value while they can. Ditto for Russia. Their goal is to take the dollar out of its position of power and cripple the American war machine. You need to learn about the world outside petroleum if you want to survive.
China plans 5, 10, 15 years ahead, The Us, maybe for tomorrow. Maybe.
Davy on Fri, 29th Apr 2016 6:13 am
“China is stockpiling oil is in preparation for the coming financial war and maybe even shooting war with the Us.”
Makati Bill, I doubt you have an inside track on what is going on in the Chinese economy and with the leadership. They don’t even know themselves. It is likely the creation of a trillion dollars of credit a few months ago is a big reason along with low prices.
“China plans 5, 10, 15 years ahead, The Us, maybe for tomorrow. Maybe.”
China is playing “planning by the seat of their pants”. They have no plan and the plans they generate are a joke. Just reflect on their market meltdown for a little insight into Chinese planning.
rockman on Fri, 29th Apr 2016 6:31 am
“They can produce conventional vertically drilled crude oil at a price much lower than the Shale (USA) and Sands (Canada/Venezuela).” Not exactly true depending upon one’s definition of “produce”. If one means the cost to produce an existing field the differential is rather small. Most US shale players can still produce positive cash flow FROM EXISTING WELLS at $10/bbl…or less. The Rockman has a number of conventional wells that are economic to produce at $3/bbl. As far as Venezuela goes consider this: in 1998 when oil was going for $17/bbl (price adjusted for inflation) they were producing 2.75 million bbls/day. When prices increased to $90+/bbl the country was producing only 1.75 mm bopd. Lower oil prices did not inhibit Vz from making money producing EXISTING WELLS.
OTOH if one means developing new fields then “produce” has an completely different dynamic. But some of the Saudi fields discovered years ago were economical to develop until reached $80/bbl…or more. Think about it for a second: for several years we had very high oil prices and saw a huge increase in US rig count and new reserves added to the books. Now try to remember how many stories you read about NEW KSA FIELD DISCOVERIES. I bet most have trouble remembering a single story. So how much does it cost the KSA to develop NEW OIL RESERVES compared to US shale players and the Canadian oil sands developers? Rather difficult to answer since the KSA does offer many details. But one of their potential new plays was exploring offshore Deep Water trends in the Red Sea. Trust me: operating in that theater is more expensive than operating in the DW Gulf of Mexico. Any oil the KSA develops in that HOPED FOR PLAY will not be cheap and probably not commercial until oil prices increase significantly.
GregT on Fri, 29th Apr 2016 8:19 am
There is so much disinformation and blatant spin coming out of the western corporately controlled media these days that it is beyond ridiculous.
Oil prices are still over twice what they were before the run up leading to the global financial crisis of ’08. It was high prices that allowed the profitability of much of the current “glut” that we now see. Obviously those producers that require higher prices to maintain profits will be the producers that go out of business first. US shale oil production, for example, which added some 5Mbbl/d, much of which requires 70-$80/bbl to break even, is not profitable at oil prices around $40/bbl. Expecting lower cost producers to cut production in order to allow higher cost producers to turn a profit makes absolutely zero sense. Pointing fingers at lower cost producers is nothing more than a distraction.
Kenz300 on Fri, 29th Apr 2016 8:33 am
The oil companies and the auto companies need to get their collective heads out of the sand and realize that the world is changing with or without them. Climate Change is real….. it will impact all of us…
It is time to move away from fossil fuels and embrace alternative energy sources like wind, solar, wave energy, geothermal and second generation biofuels made from algae, cellulose and waste. They need to change their business models and move from being OIL companies to ENERGY companies. The auto industry needs to move from just building compliance vehicles to embracing electric vehicles and start putting development and advertising behind them..
The world is moving to embrace alternative energy sources…….. the fossil fuel companies can transform themselves into “energy” companies or they can die a slow death.
As Climate Change impacts more people there will be a bigger backlash against fossil fuels.
GregT on Fri, 29th Apr 2016 8:50 am
Kenz,
The world’s economies and societies do not run on electricity. They were built with, are maintained by, and run on, fossil fuels. Removing oil from the equation would result in global financial, economic, and societal ruin. Billions of people would die prematurely, as modern industrial agriculture also runs almost entirely on fossil fuels. There is simply no replacement for fossil fuels that would allow the continuation of any semblance of BAU, with the number of people currently alive today. Climate change is definitely real, but the only solution is to return to population numbers, and standards of living commonly experienced pre-industrial revolution.
We are in a predicament Kenz. Predicaments do not have solutions. Only uncomfortable choices. Damned if we do, and damned if we don’t. Be very careful what you wish for, because chances are, you and your loved ones would not survive.
makati1 on Fri, 29th Apr 2016 9:01 am
GregT, here is the total energy use by type for the world in 2014. (WIKI)
Oil (40.7%)
Coal/Peat/Shale (10.1%)
Natural Gas (15.2%)
Biofuels and waste (12.4%)
Electricity (18.1%)
Others (Renew.) (3.5%)
Electricity is way down the list as we both already knew. Kenz doesn’t do any research or he would understand the real world better.
onlooker on Fri, 29th Apr 2016 9:01 am
Exactly, Kenz. We have limited options and a limited amount of time. Powerdown is us voluntarily choosing to adapt and alleviate as much the stresses of humanity and the Natural world. Unfortunately, I and others think we waited too long. Our huge population now stands in the cross hairs of the repercussions of overshoot. Nothing can replace the vast energy storehouse of fossil fuels and allow thus the robust support of this huge human population. Heath care systems, transportation systems, food systems all reliant of fossil fuels to keep humans healthy and alive. The depletion of FF will thus mean a much more fragile and precarious means to keep everyone alive. In fact depletion of fossil fuels combined with water scarcity stand poised to deliver much less food to people in the world. So in summary limits to growth are not negotiable. We adapt to them as best we can or we suffer the consequences of said limits.
onlooker on Fri, 29th Apr 2016 9:02 am
Sorry on humanity and the Natural world.
onlooker on Fri, 29th Apr 2016 9:04 am
Oh and I may add all these repercussions not even accounting for global warming.
JuanP on Fri, 29th Apr 2016 9:09 am
I think it looks like Deputy Crown Prince Mohammed bin Salman is the man that will be in power as the KSA collapses in the not too distant future. The guy appears to be a real psychopath. By now, the self destruction and collapse of the KSA is inevitable regardless of any actions their leaders might take. SA needs to be seriously depopulated.
PracticalMaina on Fri, 29th Apr 2016 9:12 am
Makati those numbers are for 2012, it is just from the 2014 report.
makati1 on Fri, 29th Apr 2016 9:27 am
Does it really matter/ They have not changed significantly to make any difference. Electric is about 1/5 of the total energy and could not possible power any BAU that we would recognize. And much of that electric comes directly or indirectly from fossil fuels.
onlooker on Fri, 29th Apr 2016 9:34 am
Mak, if Practical is not convinced about the preeminence of OIL with that graph, I do not know what would convince someone.
PracticalMaina on Fri, 29th Apr 2016 9:35 am
I am just pointing out that a reference from 6 years ago is going to be off because renewables have been building.
PracticalMaina on Fri, 29th Apr 2016 9:38 am
Oil has a huge preeminence there is no denying that. Change takes time.
PracticalMaina on Fri, 29th Apr 2016 9:50 am
I have found a graph from the eia that puts renewables for 2013 at 9.3%. This is including hydro I am assuming because I see a report by the same agency putting it at 5%
GregT on Fri, 29th Apr 2016 9:53 am
“Change takes time.”
It also takes energy, resources, and money, which also requires energy and resources, mainly provided to us from oil.
Install a PV system on your home, and then get back to us all with your experience. Until then, nothing more than uninformed, wishful thinking.
PracticalMaina on Fri, 29th Apr 2016 9:57 am
I have several small and medium pv panels I use for small projects, I dont own a home but if I did I would deck it out with PV because despite my republican governors best efforts the payback is still better than many other parts of the country. Did you manufacture your panels? Because the concerns you raise about renewables seem to have nothing to do with the install on your house.
PracticalMaina on Fri, 29th Apr 2016 10:00 am
We have spare oil right now, in my area everyone is speeding on the highway because fuel is cheap, bombing missions involving supersonic jets are happening every few minutes all over the world. This is the time to use fossil fuels to have a build out.
GregT on Fri, 29th Apr 2016 10:01 am
Hydro is about as close to renewable as you can get, but it still isn’t renewable. Our electricity here is 100% from hydro. The infrastructure is in dire need of repairs and upgrades, as much of it was last upgraded ~25 years ago. Electricity costs here are increasing dramatically, and the money used to pay for those upgrades comes from a society that is completely reliant on oil and gas. The resources used to build and maintain hydro electric are also 100% reliant on fossil fuels.
Without fossil fuel inputs, hydro electric is dead in the water. Literally.
PracticalMaina on Fri, 29th Apr 2016 10:14 am
Huge concrete dams would be extremely difficult and impractical to build without fossil fuels, but here in my area, there are still granite built dams that aren’t even in the pathway of the water anymore, and some that are, because the water was diverted back to its original path after the mills closed. These could be put back to work, or that style of dam could be built and implemented again. Back when we had intelligence and logic built into our society, using hand drills and ambient temp drops to split huge stones. Micro hydro can play a larger role than it currently does, yes chances are some fossil fuels would be used to get it started. The Colosseum was built without fossil fuels, as were the Dutch windmills. We got to the moon without computers, are about to finish circumnavigating the world with a solar plane and we cant even build one measly device without ff, I find it hard to believe.
PracticalMaina on Fri, 29th Apr 2016 10:15 am
I could debate all day about this, but in the end, all I can do is hope that billions of people pull their heads out of their asses and get to work trying to mitigate the upcoming disaster.
GregT on Fri, 29th Apr 2016 10:24 am
“This is the time to use fossil fuels to have a build out.”
Completely agree, but that would mean shutting down MIS, or at least severely affecting current standards of living. Not going to happen.
“all I can do is hope that billions of people pull their heads out of their asses and get to work trying to mitigate the upcoming disaster.”
All you can do isn’t going to stop the other 7.4 billion people from continuing down the path that they are currently on. Install your own PV system, and learn how to live with much less, within it’s limitations. Learn how to provide as much food as possible for yourself, and wean yourself off of the system that is causing the upcoming disaster. If you aren’t at least making an attempt to do the above, then you are a part of the problem, not a part of any possible solution. Not that there is one.
PracticalMaina on Fri, 29th Apr 2016 10:29 am
Gregt, true, first step is unfortunately the biggest, getting my own damn house and property, after that it will be much easier for me to adjust my lifestyle and where I get my power from. All I can do now is put leds in my fixtures and not speed on the highway, keep the heat low and try to not eat mass produced beef, I also recycle but cannot do the large scale compost I would like yet. At the rate I am saving currently though I should be able to get myself a modest homestead pretty quick.
GregT on Fri, 29th Apr 2016 10:43 am
The sooner the better Practical. There are still plenty of places available for relatively cheap, if you are willing to move. One of the big problems associated with all of this, is many cannot afford to move, and must stay in largely populated areas in order to make an income. In general, the further one moves away from the big centres, the less employment is available, and the lower the wages. At some point in time standards of living are going to rapidly deteriorate. Collapse now, and avoid the rush, so to speak. It’s all about trade offs. You might just find that your quality of life greatly improves, when you change your locale and learn to live with a bit less. I know mine sure has.
PracticalMaina on Fri, 29th Apr 2016 11:02 am
You hit the nail on the head man, Maine is a great example of that as Portland Maine and the entire county it is in is fairly in demand. This area is where I work right now and I am commuting a distance to cut down on rent. If I go way off the beaten path I can afford something now, but I would need to commit to being essentially self sufficient right off the bat because it would be far from most employment, and at 26 I do not have much in the way of a nest-egg, so I need to weigh my options carefully and find a balance.
apneaman on Fri, 29th Apr 2016 11:10 am
“This is the time to use fossil fuels to have a build out.”
How’s that gonna work? The first build-out is crumbling and the repair costs are sky rocketing.
In 2013 the A.S.C.E estimated it would take 3.6 trillion to bring the US infrastructure (AKA the back bone of the economy) up to speed.
Much of it has been neglected since about 5 minutes after Regan was inaugurated and the deregulation and privatization scams started.
Like fossil fuels, the build-out was a one time endowment.
In addition to the neglect, it’s all getting hammered by the consequences of AGW and not always in dramatic ways like Hurricane Sandy or Houston’s latest deluge that pissed down almost a whole season’s worth of rain in just one night. AGW is hollowing out the infrastructure in ways most people are not aware of at all. Like an unseen cancer.
Climate change impact and risks of concrete infrastructure deterioration
http://www.sciencedirect.com/science/article/pii/S0141029611000241
An Assessment of Climate Change Effects on Atmospheric Corrosion Rates of Steel Structures
https://www.researchgate.net/publication/236455033_An_Assessment_of_Climate_Change_Effects_on_Atmospheric_Corrosion_Rates_of_Steel_Structures
NASA satellite shows record Houston rain in April
“From NASA Earth Observatory — In late April 2016, record rainfall fell in the Houston area, and some areas received nearly a season’s worth of rain in one night. The deluge led to deadly flooding, and nine counties were declared to be in a state of disaster.”
http://kxan.com/blog/2016/04/28/nasa-satellite-shows-record-houston-rain-in-april/
All is not lost. There is still enough time and “political will power” to build out a few more taxpayer funded football stadiums for billionaire team owner’s and the semi illiterate knuckle draggers that will work there for 3 hours a week 8 -12 times a year @ 3 hours per shot, but only 11 minutes of action.
GregT on Fri, 29th Apr 2016 11:20 am
Your thinking is far ahead of most at your age these days Practical. Keep your options open, and I’m sure you’ll figure something out!
Practicalmaina on Fri, 29th Apr 2016 11:48 am
Gregt thanks man. Apneaman all very true and shitty.
apneaman on Fri, 29th Apr 2016 12:34 pm
Shitty? It’s going to be, but also absurdly hilarious if you take a step back and realize we only here for a minute. The amount of suffering in ape history is incalculable. And we happy few have lived like kings by any comparison to most apes who ever existed and many of us still do, but just don’t know it. In Canada, the poverty level is 24k Can. I live on 15 and want for nothing. I could walk into a hospital tomorrow and get a heart transplant and it won’t cost me a dime out of pocket. Kings.
Rick Bronson on Fri, 29th Apr 2016 1:38 pm
Rockman wrote “Most US shale players can still produce positive cash flow FROM EXISTING WELLS at $10/bbl…or less.”
If that is the case, why are they still shutting down the rigs.
It fell down by another 11 to 332
http://www.businessinsider.com/baker-hughes-rig-count-april-29-2016-4
Please don’t throw some #. Back it with a valid source. Shale Oil is going down and so are the Sands Oil.
Boat on Fri, 29th Apr 2016 2:25 pm
Rick,
Oil is a global market. Shale and tarsands will continue to be hurt as long as there is a glut. Iran for example has added 400,000 bpd since sanctions were lifted.
Since fracked wells drop production rather quickly after 2 years the glut should start to dissipate. The eia projects the glut to be at .2 down from 1.5 mbpd by the end of 2016.
Unconventional oil is around 10 mbpd. Add to that 1+ mbpd yearly demand. If unconventional oil is going down, where is that oil going to come from.
Davy on Fri, 29th Apr 2016 2:29 pm
http://www.zerohedge.com/news/2016-04-29/russia-and-saudi-arabia-locked-relentless-fight-over-chinas-oil-market
Boat on Fri, 29th Apr 2016 2:55 pm
Davy,
The Saudi have also banned Iran tankers from it’s waters.
Tanker industry sources also pointed to reports that Iran’s arch rival Saudi Arabia had banned Iranian-flagged ships from entering its waters with. Separate reports indicated Saudi ally Bahrain had imposed a ban on any vessels that visited Iran as one of its last three port calls.
“Any spread of the Bahrain-style ban on foreign ships that have recently called Iran can only fuel this hesitancy for owners who trade in the Middle East region,” said INTERTANKO’s White.
http://www.reuters.com/article/us-iran-shipping-oil-exclusive-idUSKCN0XG26V
GregT on Fri, 29th Apr 2016 5:20 pm
“Shale and tarsands will continue to be hurt as long as there is a glut. Iran for example has added 400,000 bpd since sanctions were lifted.”
Strange that, considering that Iran is currently exporting ~ 1.5Mbbl/d less than they were in 2012. Did you ever stop to think that “The Glut™” was caused mainly by shale and tar-sands oil that is too expensive for the world’s economies to afford, with oil prices too low for the producers to turn a profit? Of course you didn’t. That would be like facing reality.
apneaman on Fri, 29th Apr 2016 5:45 pm
Boat, you seem to put much faith in all those EIA
propheciesprojections.As long as they’re close eh?
EIA Cuts Recoverable California Shale Estimates By 96%
http://www.businessinsider.com/eia-monterey-shale-2014-5
GregT on Fri, 29th Apr 2016 6:09 pm
As you have so aptly pointed out time and time again Apnea. The apes love their stories.
onlooker on Fri, 29th Apr 2016 6:33 pm
Especially if it is a feel good story haha
Boat on Fri, 29th Apr 2016 6:34 pm
ape,
You do realize that estimates are price driven. If oil was at $100 estimates would jump.
If you read the eia material they even talk about which numbers are more difficult than others. They report and explain their revisions. The eia is a great resource.
onlooker on Fri, 29th Apr 2016 6:47 pm
If oil was at $100 estimates would jump.—- and so would its lack of affordability to most consumers.