I went to the Haringey Independent Cinema last night. They screened the End of Suburbia, a documentary based on the impact of peak oil on the US way of life.
No one else there questioned its assumptions, which was a little disappointing. I don't want to get into the arguments for and against so much (there's a debate at anarkismo http://www.anarkismo.net/newswire.php?story_id=2672, and Greg Palast did a short but sweet refutation in his last book) - the thing I find worrying is the psychology behind its promotion. There seems to be a slight element of glee (the end of the world is nigh!) but more than that it's based on fear and and individualisation of the issue. It's all going to come crashing down because you've been greedy.
It reminds me of a couple of things - 80s style survivalists, and a crude marxist inevitable collapse of capitalism outlook.
One problem is that if you push the idea that we're running out of oil and civilisation will collapse, the moment someone says ok, we'll transfer to a more stable energy source (coal or nuclear) then the panic's over.
Also, the only time structural issues get mentioned, it's vague stuff about the oil companies being bad. Except none of them mention that the original Peak Oil paper was produced for Shell, or that it might be in the interests of oil companies to understate available oil.
I'm not dissing HIC by the way, it's a great local initiative.
Yeah, peak oil obsessives
Yeah, peak oil obsessives just seem like those catastrophists. As if capital will let something like that happen. There may be some "problems" but I don't think there's going to be any huge disasters...
There is a fairly long
There is a fairly long critical examination of Peak Oil theory in Red & Black Revolution 12 which came out about a month back. We should be putting the articles online in the near future.
Theres a long thread
Theres a long thread somewhere in this forum about it as well.
Not meaning to derail but
Not meaning to derail but Rob Newmans 'History of Oil' seems similar, though of course hes funnier than most primitivists...
http://video.google.co.uk/videoplay?docid=7374585792978336967&q=rob+newman+history+of+oil
That article I mentioned is
That article I mentioned is now online at http://www.indymedia.ie/article/81815
Brilliant, thank you...
Brilliant, thank you...
The follow-up debate is
The follow-up debate is worth reading too ..
Its also on
Its also on infoshop
http://www.infoshop.org/inews/article.php?story=20070405061317169
and anarkismo
http://www.anarkismo.net/newswire.php?story_id=5296
now
Quote: tigersiskillers
That marxist outlook you mention, has and always has had, a sense of parousia to it (quite possibly inherited from Hegel and Protestantism) - it can be summed up as - peak oil is bad, but anything bad is a sign of imminent glory! What makes this interesting is that right-wing Christians in America are apocalyptic in a very literal sense, so its worrying if these two currents begin to overlap.
Quote: It reminds me of a
A lot of people do give peak oil some sort of poorly considered eschatological status. It is definately going to be a significant factor in the political and social future of the world though as none of the proposed alternatives are looking all that viable. Using ethanol for transportation seems unlikely [given the mass amounts of land required] and reducing the price and ease of manufacturing hydrogen fuel cells to workable levels is also going to be very difficult to implement before the price of fuel becomes a serious problem. Peak oil wont be the death of capitalism but its definately a serious blow in my opinion. We shouldnt idolise an event that could cause suffering for millions but it would be foolish not to recognise its potential.
Quote: We shouldnt idolise
Peak oil could be used as a Sorelian myth to create greater discontent among the working classes - but it could be used by the Establishment as well, the same way nuclear war and Islamic terrorism are, I can see governments subjecting people to harsh laws under the guise of protecting them from environmental problems very soon (I wonder if it hasn't already started?). For this reason we need to counter the Establishment's portrayal of the environment crisis as an inevitable trial caused by nature, work on building a consciousness that peak oil, global warming and the rest are entirely man-made problems, and that refers to a very specific group of men.
Here's recent news on the
Here's recent news on the issue:
"World crude production 2013 without shale oil is back to 2005 levels"
http://www.resilience.org/stories/2014-03-26/world-crude-production-2013-without-shale-oil-is-back-to-2005-levels
In short, crude oil production peaked in 2005. What is meeting oil demand is unconventional oil, which has lower energy returns and will not last.
The reason why this is happening is simple: even through estimated reserves are high, most of the oil is too deep or requires more processing, leading to lower energy returns.
Hi again ralfy. We two have
Hi again ralfy. We two have discussed this before here, but I still don't know what you think should, or even can, be done about it.
I don't think anything can be
I don't think anything can be done about this issue because there's no more "easy oil" available.
So we are all doomed then?
So we are all doomed then?
Localization and
Localization and sustainability will be important, and will certainly involve skills related to permaculture, renewable energy, water management, etc.
Personally I would be fecking
Personally I would be fecking delighted if we ran out of fossil fuels before we destroyed our environment. Sadly that's just not going to happen. The current estimation of known exploitable reserves is more than enough to raise global temperatures to catastrophic levels. Now the maniacs are planning to set fire to coal seems underground and recover gas that way*. Peak oil? I wish!
Until we end the law of value/capitalism, the profitability of fossil fuel exploitation looks set to continue to crowd out any investment in renewables. After all, once you've built renewable generating plant, the power it produces is free - and where's the profit in that? Sustainable capitalism is a pipe-dream, as is any idea of a transition to a post-fossil fuel economy that doesn't pass through the overthrow of capitalism.
* https://en.wikipedia.org/wiki/Underground_coal_gasification
Global oil discoveries peaked
Global oil discoveries peaked in 1964. U.S. oil production peaked in 1970. Global oil production per capita peaked in 1979. Conventional production peaked in 2005. Production for the five major players has dropped by 25 percent.
These are happening because peak oil involves production rate, which is affected by energy return. Also, global demand has been going up.
As shown earlier, we are now using unconventional oil to meet demand, but this has low energy returns and steep decline curves, which means it will not last:
"The Myth of 'Saudi America'"
http://www.slate.com/articles/health_and_science/science/2013/02/u_s_shale_oil_are_we_headed_to_a_new_era_of_oil_abundance.html
What Ralfy argues has been
What Ralfy argues has been argued every year since 1970, with the "end of days" reportedly at 1979, then 1986, then 1999, then.....Campbell, Deffeyes, and other peak oilers keep pushing out the date for the depletion of hydrocarbon reserves below recover-ability ; and consistently, petroleum companies have been able to get more production from fields than predicted in the initial discovery and access. Where are those reserves coming from? From the drill bit.
What is unconventional oil? Unconventional happens to be an economic category, not a geological one, just as reserves are an economic category-- defined by the USGS and others-- the amount of oil that can be recovered using current technology and at a know profitability. Really.
Is deep drilling "unconventional" oil? Only until advances in technology made it "conventional." Is shale oil "unconventional"--not any more because the economics of extraction have made it practical, i.e. profitable.
Its all well and good to point out that minus shale, global production is at 2005 levels-- however, it's not good enough, because that too is not a geological argument-- it's an economic one. Look at the industrial output from the advanced countries over the last five years; look at the amount of energy required per unit of production, say for the US, it has declined. Over all production of crude oil (a different category than petroleum and petroleum liquids) increased 24% between 1980 and 2010. Production of petroleum and petroleum liquids has steadily increased every year since the downturn in 2009. (This data is all freely available from the US Energy Information Agency Website www.eia.gov
Ocelot's right. Capitalism will poison and destroy the planet before it runs out of coal, petroleum, gas. One of the "newer" "unconventional" technologies is to tap into methyl hydrates-- huge deposits of methane gas under the sea that are "frozen" by the intense pressure and low temperatures at the depths of the deposits. And where do the bourgeoisie find the perfect "test" plot to tap into this "greenhouse gas"? Why off the coast of Japan, in the earthquake zones that surround those islands.
Best book I've read on the issue of peak oil is Steven Gorelick's Oil Panic and the Global Crisis
ralfy wrote: I don't think
ralfy
Not so sure about this. Kurdistan has oceans of the black stuff including both heavy and 'sweet'. There's a big pipeline built/being built and the established majors - Genel, Chevron - are operating along with explorers like Gulf Keystone who may soon be a major themselves. It may not be easy oil politically but capital isn't going to let that stop it, not when there are millions of BPD to be had.
With the cost price of oil
With the cost price of oil for the US producers at about $10 a barrel, and the market price around $100 a barrel, there's plenty of "cheap oil" for the capitalist producers.
I've had enough of this crap.
I've had enough of this crap. I've got otherwise pretty clever folks back home that equate oil-crisis with the destruction of capitalism. Ugh.
S. Artesian wrote: What Ralfy
S. Artesian
The "end of days" was not reported, and the dates were not pushed forward except once. Hubbert argued in 1976 that due to the 1973 oil shock the peak for conventional oil production moved forward from 1995 to 2005.
In 2010, the IEA confirmed that conventional production peaked in 2005. More details can be found in my first link.
Oil companies have not been able to produce more. Again, check my first link.
Finally, the problem isn't getting reserves but getting reserves for a high energy return. That's why even with lots of conventional oil available we are now resorting to unconventional oil, as most of reserves are too deep to extract economically.
That's also why the oil price has tripled and oil production cost now reaching that.
For more details, check the IEA Outlook 2010 report.
Unconventional oil is given in the EIA glossary.
Also, unconventional oil has lower energy returns.
Again, check the EIA glossary for details. Also, energy returns for unconventional oil and deep sea drilling are low. That's why conventional production can no longer catch up with demand and we are now using shale oil.
It's a geological argument. The main reason we are using shale is because conventional production can no longer meet demand. That's peak oil.
Obviously, what affects crude oil will also affect shale oil. More details in my previous posts.
A 24-pct increase for two decades has to take place because demand has to go up by at least 2 pct a year to maintain economic growth; that's been the case for the last three decades. More details are given in the IEA Outlook 2010 report.
The problem is that the IEA forecasts a 9-pct increase for the next two decades with all oil and gas production put online and at maximum depletion rates. Demand increase per annum is expected to increase further as more people worldwide join the middle class, especially from BRIC and emerging markets (up to 50 pct of the world's population).
In short, we will need the equivalent of one Saudi Arabia every seven years just to meet economic growth.
Finally, the data presented in my first link comes from the EIA.
Peak oil is not about running out of oil.
Unconventional oil has lower energy returns. Given that, we face the effects of peak oil and global warming. More details can be found in the IEA Outlook 2010 report.
This one is also helpful:
"Global Oil Market Forecasting: Main Approaches & Key Drivers"
https://www.youtube.com/watch?v=dLCsMRr7hAg
Webby wrote: Not so sure
Webby
Consider reserves vs consumption rate. 45 billion barrels of reserves divided by 80 million barrels of oil consumed daily is 562 days, or less than two years' worth.
And that's assuming that all 45 billion barrels can be extracted at the same price, which isn't the case. And that oil consumption per day won't go up.
Finally, see the lecture shared earlier in light of capital expenditures.
S. Artesian wrote: With the
S. Artesian
I think the oil production cost globally is now above $85 a barrel.
bozemananarchy wrote: I've
bozemananarchy
The IEA hopes that it will not, i.e., if the world can replace over 70 pct of oil demand increase with renewable energy. But that will be very difficult as transition to renewable energy involves both an energy trap and a lag time.
ralfy wrote: In 2010, the
ralfy
Wrong, wrong, wrong. The Hubbert Peak is an absolute peak in oil production - here are the EIA figures for world oil production (from here)
So far, no peak, not in 2005, nor since.
The energy returns are irrelevant (other than meaning the actual CO2 release rates go up per unit combusted). Capitalism will keep producing oil as long as it keeps being profitable. Its the monetary returns, not the energy returns that matter to capitalism.
And just on this: ralfy
And just on this:
ralfy
Here is the definition from the EIA glossary:
Which makes S. Artesian's point that its an economic category.
The average daily global oil
The average daily global oil supply has exceeded the 2005 so-called peak every year since 2009. It makes no sense to claim that the peak occurred in 2005 if we discard the output of the shale fields. Either those fields are part of the total "endowment" of reserves, the endowment being one of the key parameters for Hubbert to make his calculations, or there is no basis for making the calculations of peak.
The "oil endowment" includes the estimated oil resource (resource being a "concentration in or near the earth's crust in such form and amount that economic extraction of a commodity is currently or potentially feasible") plus all the oil that has already been extracted. A "reserve" is a portion of a resource that can be economically extracted or produced at the time of discovery.
Clearly, we can the basis for the changing estimates of reserves, and resources-- they are economic functions,not geological. That there exists a finite supply is not the issue. Everyone agrees that there is a finite supply. The issue is economically and thermodynamically can the extraction process yield a surplus? If the answer is yes, then the next question, "for how long" depends not solely on the resource or the reserve, but the technology and social organization of extraction
Hubbert made various projections for the global peak of production, with the last ones centering around the year 2000. His "heirs" Campbell, Deffeyes, Laherrere have all made predictions that haven't come to pass, and of course, many of the Hubbertists have revised their estimates of the oil resource.
As for "unconventional sources"-- here is the criteria utilized by the USGS:
The oil and natural gas resources that exist in geographically extensive accumulations.
[nothing different there]
The deposits generally lack well-defined oil/water and gas/water contacts and include coalbed methane, some tight sandstone reservoirs, chalks, and auto-sourced oil and gas in shale accumulations.
[what of this is a specific geological category?]
The assessment methodology and production practices vary from conventional resources.
[Finally, we get to the nitty gritty-- which is a function of technology; and technology is a function of economics]
Finally, Ralfy should check the reports filed by the major oil producing companes-- which provide the average cost-price for the company of a barrel of oil. $10, not $85, is the number. Certainly, that is an increase-- from the $2.50 it was not so long ago; but it's not that much of an increase given rates of inflation.
Now we need to examine the notion that the shortage of "cheap oil" has driven the price upwards-- the usual evidence cited for this is the fact that the application of greater investments in the technological apparatus of production are required to access the less accessible supplies, and because oil is a limited resource, we have the classic Ricardian rent syndrome, where the most expensive producer determines the price of the commodity for all other producers.
First, let's ask ourselves, if this is the case, what has been the experience with other limited fossil resources that have required greater applications of technology.......like coal (the "approaching peak" in coal production was also a concern of Hubbert). Has the production of coal been driven by a "bell shaped curve" and if not, why is coal different from oil? Fossil fuel, under the ground, so what's the difference. Has the depletion of fields and the introduction of new technologies driven the price of coal relentlessly upwards? Not hardly.
I would argue that the price spikes and collapses of oil have nothing to do with supplies or "ease of extraction." Let's remember, fixed capital, increases in the application of fixed capital do not and can only be passed along over the life of the apparatus, and tend to reduce the cost of unit production. BUT what can occur is that profit, value, gets distributed according to the size of the capitals deployed. There is no greater mass of capital concentrated in a single sector of capitalist production than the mass concentrated in petroleum. And that massive capital demands a share of the profit proportionate to its size. This distribution is accomplished through the price mechanism.
Short version: If OPEC didn't exist, the bourgeoisie would have had to invent it. OPEC did exist, and the bourgeoisie still had to invent it.
We might ask ourselves what is the basis for Hubbert's analysis-- that there is a finite quantity of oil available, and that extraction of that oil follows a predictable path which reaches a limit that cannot be overcome. Well who can argue with that? I mean after all, what's he arguing really? Nothing but the laws of thermodynamics; the law of entropy. The issue is are we at the edge of the cliff now? Soon? In the near future? All available evidence is that that answer is no.
What is evident, however, from the writings of Hubbert and his followers, is the strong Malthusian bias to the analysis (with at least one or more of these Hubbertist followers likening human beings to a "virus" on the body of the earth) which uses predictions of catastrophe to make an indeterminate process appear as an immediate threat.
ocelot wrote: Wrong, wrong,
ocelot
The IEA confirmed this in 2010:
"IEA acknowledges peak oil"
http://www.resilience.org/stories/2010-11-11/iea-acknowledges-peak-oil
but the peak for crude oil production began in 2006 and not 2005.
For the 2005 peak, Hubbert was referring to crude oil production. Data from the same EIA is presented in the second chart here:
http://www.resilience.org/stories/2014-03-26/world-crude-production-2013-without-shale-oil-is-back-to-2005-levels
Crude oil production peaked in 2005, leading to an ave. of 73.4 Mb/d. Shale oil is adding 1.2 Mb/d to that to meet demand.
From what I remember, it was argued before 2005 that by 2010 crude oil production would exceed 90 Mb/d and that the oil price would drop to less than $30 a barrel.
Finally, production per capita is more logical because production meets a growing population. That peaked back in 1979:
"Peak oil? What peak oil?"
http://cassandralegacy.blogspot.com/2013/07/peak-oil-what-peak-oil.html
Notice that multiple sources lead to the same conclusion.
Energy return is relevant for obvious reasons:
"Why EROI Matters (Part 1 of 6)"
http://www.theoildrum.com/node/3786
In fact, that's the reason why crude oil production has peaked at 73.4 Mb/d, why the world is now resorting to shale oil, why shale oil will also not last:
"The Myth of 'Saudi America'"
http://www.slate.com/articles/health_and_science/science/2013/02/u_s_shale_oil_are_we_headed_to_a_new_era_of_oil_abundance.html
why production for the five major players have dropped by 25 pct:
http://www.theoildrum.com/node/9946
and why oil production cost is rising.
ocelot wrote: And just on
ocelot
But if you look at the other points, you will see that it is also one that involves "resource characteristics," etc. In short, no matter how much money is expended to get oil that is deeper or requires more processing, the energy return will still be low.
That's why crude oil production has been in a 73.4 Mb/d plateau since 2005 and shale oil has taken over. That's also why U.S. oil production peaked back in 1970.
S. Artesian wrote: The
S. Artesian
The reason for this is that we are using shale oil, as shown in the first article I shared, and the data comes from the EIA. The fact that we are using shale oil while crude oil has been in a 73.4 Mb/d plateau is proof of peak oil.
The IEA gives more details in its 2010 report:
https://www.iea.org/publications/freepublications/publication/name,27324,en.html
What's important is not oil reserves but production rate:
"The only true metric of energy abundance: The rate of flow"
http://www.resilience.org/stories/2013-04-28/the-only-true-metric-of-energy-abundance-the-rate-of-flow
In fact, the effects of peak oil can take place even before oil production drops. That is, when demand exceeds production.
That's exactly the reason why we should not look at reserves.What needs to be studied is historical flow rates and capital expenditures. There are more details in the lecture shared earlier.
From what I remember, he argued that crude oil production would peak in 1995+10 years due to the '73 oil shock:
"1976 Hubbert Clip"
https://www.youtube.com/watch?v=ImV1voi41YY
In 2010, the IEA confirmed what Hubbert argued:
"International Energy Agency says 'peak oil' has hit. Crisis averted?"
http://www.csmonitor.com/World/Global-Issues/2010/1111/International-Energy-Agency-says-peak-oil-has-hit.-Crisis-averted
Consider the EIA definition.
But economics is affected by energy cost. That's why oil production cost for unconventional oil is high.
Given a global survey, as of 2013 it was between $50 and $90 a barrel for crude oil and $70 to $90 for Bakken and others:
https://en.wikipedia.org/wiki/Unconventional_oil#Extra_heavy_oil_and_oil_sands
That's part of peak oil and also proves my argument. See the lecture shared earlier for details on capital expenditures.
Logically, what affects oil should also affect coal. See, for example,
"Peak Coal Passed in 2008 as Mining Costs Rise, Group Says"
http://www.bloomberg.com/news/2013-10-30/peak-coal-passed-in-2008-as-mining-costs-rise-group-says.html
What should be considered is increasing resource and energy demand worldwide, especially given a growing global middle class:
"The rise of the global middle class"
http://www.bbc.com/news/business-22956470
According to the IEA, in order to meet global economic growth, the equivalent of one Saudi Arabia every seven years will be needed. In order to meet that and a growing global middle class, even more will be required.
That's assuming that production rises significantly, but that's not the case, as shown in the EIA data for crude oil production. See the lecture shared earlier, which looks at production and capital expenditures.
It won't matter, as this does not change the physical limitations of oil production.
It's irrelevant to ask when oil production will drop as the effects of peak oil can take place even before that happens. That's why the price of oil has tripled, and oil production cost is catching up.
[/quote]
The point that oil is finite is not based on bias. Also, Hubbert was not predicting catastrophe as he thought that nuclear energy could replace. See his first report for details.
This lecture was mentioned
This lecture was mentioned earlier:
"Oil Supply and Demand Forecasting with Steven Kopits"
http://www.resilience.org/stories/2014-02-25/oil-supply-and-demand-forecasting-with-steven-kopits
Also, "Interview with Steve Kopits"
http://peakoil.com/production/interview-with-steve-kopits
See also "World Energy Outlook 2010"
https://www.iea.org/publications/freepublications/publication/name,27324,en.html
This is that 9/11 thread all
This is that 9/11 thread all over again. Different conspiracy, same methodology. Can't make your own argument? No problem - just spam 'em with links to a rake of video lectures, partisan journalism and random reports. Job done.
The conspiranoid's insistence of the shining truth of their chosen conspiracy in face of all countervailing evidence, is inversely proportional to their (in)ability to explain what useful understanding it really adds to the critique of capitalism.
Also William Jevons believed Peak Coal was upon Victorian Britain back in the 1870s and would bring about the downfall of the Empire. It didn't - world wars and anti-colonial struggles did, however. Jevons is the middle link between Malthus and Hubbert
The EROEI (energy return) has
The EROEI (energy return) has been in steep decline since the 1920's, not the mid 1990's. When the mass use of oil started the first sources used were close to or on the surface, in some cases you could extract the oil with bucket chains. They had super high EROEI of 100 or more. By the 70's that had fallen to 20. Yes unconventional sources mean a fall of a similar magnitude again but as w saw from 1920-1970 that actually tells you nothing beyond that the number has fallen.
I wrote a fairly long dismantling of the Peak Oil scare back in 2007 that has survived the seven years since pretty well that looks at the EROEI argument in some detail - its at http://anarchism.pageabode.com/andrewnflood/the-politics-reality-peak-oil-scare
Ralfy wrote (referring to the
Ralfy wrote (referring to the supposed Ricardian rent basis for peak oil):
Ralfy misses the point. Ricardo was wrong-- as is the nonsense about peak coal.
Ralfy also wrote:
Then why is he telling us that output from "conventional sources" is back to 2005 levels? Why is he telling us that production in 2009 was below previous estimates for that year? Why is he telling us that and ignoring the impact of the greatest economic contraction since the great
depression on output and consumption?
As for bias-- Hubbert was a technocrat; literally-- thought the technocrati should run society. You don't call that a bias?
Regarding oil production
Regarding oil production costs-- This from the EIA might help:
Lifting costs are usually averaged over a three year rolling period to account for changes in taxes, unusual circumstances, one-offs, etc.
Needless to say, $11-$12 bbl in 2009 might or might not be what the lifting costs are today, but it's clear that such costs are nowhere near the $80-90 range that Ralfy quotes. Even if you add "finding costs" which are an estimate based on the anticipated size of the reserve discovered, you get costs per barrel of around $45 dollars, and.......I don't believe there's an oil field in history that hasn't produced over its production life more oil than originally estimates thought likely.
ocelot wrote: This is that
ocelot
Peak oil is not a conspiracy but a physical phenomenon. That's because oil is a finite resource. Given that, it is obvious that production will peak and drop.
What I presented is not "spam" but facts about the issue.
To find out about peak coal, read the peer-reviewed report mentioned in this article:
"Study: World's 'Peak Coal' Moment Has Arrived"
http://www.nytimes.com/gwire/2010/09/29/29greenwire-study-worlds-peak-coal-moment-has-arrived-70121.html
According to the article, the report is challenged by governments and industries. From what I read, the same mistakes are being made, such as referring to reserves and not production rate vs. expected demand.
AndrewF wrote: The EROEI
AndrewF
The EROIs are given in a chart presented here:
"Why EROI Matters (Part 1 of 6)"
http://www.theoildrum.com/node/3786
That is, from 1:100 in 1930 to 1:30 in 1970 to less than 1:20 today. That's peak oil.
The EROI for crude oil is now similar to that of shale oil. For tar sands and biofuels, the returns are even lower.
The energy requirement for industrialized countries like the U.S. is around 1:40. But if more people join the middle class, as shown in the first chart of this article:
"Peak Oil Demand is Already a Huge Problem"
http://ourfiniteworld.com/2013/04/11/peak-oil-demand-is-already-a-huge-problem/
and this article:
"The rise of the global middle class"
http://www.bbc.com/news/business-22956470
then even more oil will be needed. How much more? According to this article:
"Former BP geologist: peak oil is here and it will 'break economies'"
http://www.theguardian.com/environment/earth-insight/2013/dec/23/british-petroleum-geologist-peak-oil-break-economy-recession
we will need one Saudi Arabia every 3-4 years.
S. Artesian wrote: Ralfy
S. Artesian
How do you explain increasing capital expenditures? Please refer to the Kopits lecture and state which point is incorrect.
Also, in reference to peak oil, please consider the journal article "A global coal production forecast with multi-Hubbert cycle analysis" and point out what is incorrect.
I am giving two points:
Peak oil has taken place, and the drop in conventional production and the flat average at 73.4 Mb/d is proof of that. The same goes for using shale oil to make up for the lack of production.
However, the effects of peak oil can take place even before total production drops. That is, if oil consumption for the rest of the world continues rising, then prices will go up, and shortages are inevitable.
S. Artesian wrote: As for
S. Artesian
I don't understand this point. Are you looking for a non-technocrat to discuss this issue? If so, then why not give some examples?
S. Artesian wrote: Regarding
S. Artesian
I think more recent data is needed, with transport and recovery costs included. For example, according to a report mentioned in this article:
"Oil sands crude not as expensive to produce as it used to be"
http://business.financialpost.com/2013/08/19/oil-sands-crude-not-as-expensive-to-produce-as-it-used-to-be/
Worldwide supply cost is around $90, i.e., minus 10-pct return on capital. For oil sands, it's around $70, and $80 for shale oil.
The numbers are similar to those presented here:
"The cost of new oil supply"
http://www.smartplanet.com/blog/the-energy-futurist/the-cost-of-new-oil-supply/
Similar data can be seen in the IEA 2010 report.
ralfy wrote: Peak oil is not
ralfy
That's the reactionary core of this whole anti-politics right there. It's the idea that the productivist crisis of capital, that manifests simultaneously as an energy, ecological, economic and social crisis, is physically based, rather than a product of the historically specific social relations of capitalist production.
I say reactionary on a number of levels.
First by obfuscating the actual dynamics of capitalism, and claiming that these are irrelevant to the crisis.
Second by claiming that the crisis is purely technical, and therefore has no connection to the exploitation and oppression of people - and its solution is therefore not to be found in people's struggles for emancipation from wage slavery or political oppression. Further that these struggles are a diversion from the "real problem".
Third, by siding with the enemy - i.e. the bosses of the petro-industrial complex - who claim that "there is no alternative", i.e. renewables, nuclear*, etc are all a waste of time and not worth investing in. This aids and abets the enemy by obfuscating the fact that there is no technical reason why we cannot transition to renewables, the blockage is political-economic - i.e. there are structurally less opportunities to sell units and extract surplus value from renewables and the more efficient use of combustion products in Combined Heat & Power generation (engineers in particular don't get why CHP is not part of any new build project - precisely because they don't understand the political-economic dynamics of capital). All existing power generating processes release at least 50% of extracted energy as heat. With centralised power generation that heat is just vented directly into the atmosphere. CHP - i.e. using that heat energy to heat homes rather than the sky - makes unarguable technical sense. But it doesn't make capitalist sense. And the oil barons want you to think that is a "physical fact". And the peak oil conspiranoids support them in this.
Fourth, by a catastrophism that claims "nothing can be done", which tells people to remain passive and cynical and asserts their lack of power to change the situation.
Finally, I want to add in a quote from a recent position paper by the Confederation des Groupes Anarchistes (CGA) of France, which although targetted at Degrowth, applies also to the anti-historical peak oilers:
The peak oil conspiracy is entirely compatible with a fascist politics - and in fact Technocracy is, imo, an engineers fascist fantasy.
* disclaimer: not that I'm advocating nuclear, n.b.
Ralfy, I'm not going to
Ralfy,
I'm not going to review your literature and provide you with a checklist of what's wrong. Increasing capital expenditures are inherent in capitalism-- kind of why it's called advanced capitalism. Capital expenditures are in the US railroad industry are 15x the level of 20 years ago. That doesn't mean unit prices have increased; real freight rates are well below what they were 3 decades ago.
You want transportation costs figured in to lifting costs-- swell, except producers don't pay the transportation costs-- the purchaser does as those are folded into market prices implicitly, or charged to the purchaser directly.
You want to claim production costs are 90% of market prices, go right ahead, but don't pretend that has anything to do with the real production costs of the product, and don't spew nonsense that tries to obscure the real lifting costs by stating: "Worldwide supply cost is around $90, i.e., minus 10-pct return on capital. For oil sands, it's around $70, and $80 for shale oil." That's utter nonsense. You're simply using market prices minus the return on capital, and calling the remainder "production costs." Rates of return are not calculated that way; production costs are not calculated that way.
Your argument about production costs is simply incorrect. Your argument that the oil peak has arrived depends on excluding from production new, and profitable production methods. You claim that the effects of peak oil are manifested before production declines, which is a meaningless argument. The impacts of declining production are felt before production declines? Even when production is expanding? That's very cosmic of you but it makes no real sense. Does entropy exist? Is there eventually going to be heat death of the universe? Sure thing, there are laws of thermodynamics. But are the impacts of a contracting universe felt when the universe is expanding?
Were the impacts of peak oil felt in the 1990s when 3D seismic imaging and horizontal drilling extended the life of practically every field, and brought the production costs back to the level of around 1949?
Hubbert based his analysis on a single, critical assumption-- that all oil production would follow the pattern of a single oil field. The critical assumption has been taken over, uncritically, by the little Hubbertists. But the history of production has not followed this single field pattern.
Indeed, even the US, with its previously steadily declining production did not show the same steady decline in proven reserves and proved recoverable amounts. Between 1977 and 2002 US cumulative production increased 68.2 billion barrels, 56 percent, to 189.6 billion barrels. Proven reserves, which measured 33.6 billion barrels in 1977 declined only 25 percent to 24.0 billion barrels in 2002. Proven ultimate recovery increased in this period from 155.0 billion barrels to 213.6 billion. Proven reserves actually increased between 1998 and 2002.
The disparity between cumulative production and remaining reserves is itself a product of replacement at the drill-bit-- where production has led to more accurate estimates of remaining reserves. This is the pattern that is being repeated right now in Russia, Colombia, Mexico, Nigeria, Sao Tome.
In Mexico proven reserves over time have declined by about 70%, a decline which if we follow the Hubbert curve should have eliminated Mexico as a producer years ago. That has not occurred-- why? because proven reserves are an economic category, not geological. Proven reserves declined as production increased, and funds for further exploration and development of Mexico's major and minor fields declined.
And I would point out that during this period, the Hubbertists were hard at work telling everybody not only that the end was near, the end had begun, and the peak had occurred.
Ocelot wrote: Quote: After
Ocelot wrote:
I fully agree with the second sentence but the first one obviously depends on what you mean by ‘you.’ If there is private property in the means of production in the great majority of installed renewable energy systems and 'you' are a capitalist, then for example by building and owning large offshore wind farms or huge solar electric power plants, then the fact that the sun doesn’t shine enough for small standalone PV to supply all domestic electricity, in combination with the fact that due to turbulence small scale wind doesn’t currently work in most areas of cities, ‘you’ would simply be carrying on business as usual by controlling electricity, one of the current means of survival for any modern civilisation.
Ocelot wrote:
I agree fully with the spirit of this but a fact is a holy thing and its life should not be laid down on the altar of a generalisation. For example, according to the Global Wind Energy Council Global Wind Report, wind energy is still the fastest growing source of electricity in the world. In 2012, nearly 45,000 megawatts (MW) of new capacity were installed worldwide, a 10 percent increase in annual additions compared with 2011.
From the opposite perspective, in the Ralfy-Artesian exchange I tend to agree with one of the thrusts of AndrewF's article that in the case of Peak Oil one person's impartiality is another person's bias, even if everyone (as is rarely the case) is striving to be objective. People who find this subject to be of great importance, both positively and negatively, to themselves and to class struggle, seem also very often to have made up their minds that humans always turn on each other in times of scarcity.
factvalue wrote: Ocelot
factvalue
From "first principles" your argument is correct - but only insofar as the players in the energy generation market operate a cartel and abstain from competition. Then rents can be extracted from divvying up a monopoly over a vital section of the means of production.
However, and this is a derail, but hopefully still marginally relevant, I have a lot of time for Michael Perelman's thesis (in e.g. "The End of Economics", "Railroading Economics") that marginal production price costing is not just an abstract falsity of neoclassical economics, but actually represents a concrete problem for capitalism in sectors with a relatively high level of fixed costs - the US railroad industry boom and bust of the turn of the 19th & 20th centuries being the exemplary case. The argument goes that as competing enterprises in a high fixed-cap industry run into a periodic downturn, the pressure of their debt repayments forces them to drop prices to the actual marginal operating costs, to gain or retain market share, and this eventually leads to ruination across the industry as prices drop to below the capital-sustainable level of marginal cost + fixed cost debt amortization.
If there's one contemporary industrial sector that is glaringly biased towards fixed costs over marginal operating costs, it's renewables. This is why the petro-industrial complex is so keen on keeping a very close eye on the state of the art in renewables, without actually pushing its development - while at the same time propagandising against its viability as an alternative.
From their point of view, the only way they could gain money from renewables is if they could use them to generate the barrels of oil equivalent (boe), energy input into mining fossil fuels. Because the input energy in the EROEI formula is equivalent energy, rather than like for like material ratio, certain commercially profitable oil operations already run at an EROEI less than 1, as they use associated gas reserves that are not economical, given the rig location, to capture and transport (gas from oil rigs is still often just burnt off) to provide the input power.
In summary, if Perelman is right on the problems of high fixed cost/low marginal cost industries in a competitive context (and I think he is), then oil companies may be very reluctant to see the development of renewable technologies in case they undermine the conditions of their existing cartel - which is ironically based on the barrier to entry imposed by the same high fixed costs that are the source of the problem in a competitive context.
Ocelot wrote:
I agree fully with the spirit of this but a fact is a holy thing and its life should not be laid down on the altar of a generalisation. For example, according to the Global Wind Energy Council Global Wind Report, wind energy is still the fastest growing source of electricity in the world. In 2012, nearly 45,000 megawatts (MW) of new capacity were installed worldwide, a 10 percent increase in annual additions compared with 2011.
[/quote]
Well, factually true when taken in isolation. But the bigger context is that a 10% increase of sod all is still sod all, on the big (unholy) picture scale.
About that economic category
About that economic category of proven reserves:
From the EIA:
An interesting discussion, in
An interesting discussion, in which a fair amount of the debate consists of people talking past each other - despite copious quoting. I wish I had come across this thread earlier.
At the outset, let me say I am an adherent of the Peak Oil theory. I have also, among Peak Oilers, been arguing with the Malthusians amongst them. In the Peak Oil community, they are known as doomers and comprise about half the contributors to the Peak Oil discussion sites I have been watching over the years. Most of the rest are green reformists of some description, with a smattering of political radicals.
The basis of the Peak Oil movement comes from the re-discovery of Hubbert's observations around the turn of the 21st Century. It takes the unarguable fact that there is a finite endowment of liquid hydrocarbons in the world and adds Hubbert's basic argument that production will follow a bell curve as first, discoveries will peak and slow down and then production will peak later as rising demand runs into geological constraints on supply.
Subsequent history has demonstrated the limitations of Hubbert's predictions, but has not invalidated the underlying theory. First of all, the date of Peak Oil is sensitive to the size of the overall natural endowment, called in the industry "Oil in Place". Secondly, it is affected by changes in technology, which affect the Ultimately Recoverable Resources. While there hasn't, to my knowledge, been a large unanticipated increase in the estimate of the world's total endowment of liquid hydrocarbons, there have been some unanticipated and relevant changes in technology. In particular, technology has becme available to release the oil trapped in shale formations. This is often called shale oil, but many people prefer to call it tight oil, in order to avoid confusion with oil shale, which produces kerogen and has not been able to be exploited commercially on a large scale.
The Peak Oil doomers are, almost universally, political conservatives. They accept the logical argument of the Peak Oil theory, which has as a conclusion that the material underpinnings of capitalist society are unsustainable, but the only civilised society they can imagine is the one they currently live in. Therefore, they conclude that "all is lost" and there will be a reversion to, at best, the Middle Ages. They quote an alleged Saudi Arabian saying:
My father rode a camel. I drive a car. My son flies a jet plane. His son will ride a camel.
The doomers dismiss the possibilities of renewable energy, often by reference to the immense capital investment that will be needed to convert global energy systems, supplemented by observations of some genuine and some alleged limitations of wind and solar power.
The wrong-headed Right wing, Malthusian politics of the doomers, however, do not invalidate the basic Peak Oil theory. Once you strip them away, we are left with what is basically a geological constraint on capitalist economic growth, one which is separate from, but related to, ecological constraints like climate change.
It is at this point that I need to refer to previous discussion. As pointed out, Hubbert's prediction of Peak Oil referred to "conventional oil", something which did, indeed, peak around the time of his final predicted date. Total production has continued to increase, however, due to unconventional oil. Debate between Ralfy, on one side, and S. Artesian and Ocelot on the other has revolved around whether unconventional oil is different from conventional oil. I believe that it is different, in a number of ways, but these ways affect Peak Oil predictions differently and that we need to understand them in order to know what's going on.
There are several categories of unconventional oil:
(a) Deep water oil;
(b) Heavy oil (e.g. Canadian tar sands & Orinoco ultra-heavy oil);
(c) Polar oil;
(d) Tight oil;
(e) Oil shale (kerogen).
Categories (a) & (c) are not especially large and have no great impact on Peak Oil theory. Their difference from conventional oil arises not from the physical properties of the oil produced, but from the considerably different and more expensive technology required to find and extract it.
Category (b) is very large, but there appears to be a strong limit on the rate at which oil from the Canadian tar sands and the Orinoco deposits of ultra-heavy oil can be extracted. The date of Peak Oil depends quite significantly on whether this limit is real or apparent. At present, it looks pretty real to me, at least when the Canadian tar sands are considered. The limiting factor there is the supply of water, something which is necessary in the production process. My estimate is that heavy oil will not delay Peak Oil, but will be significant in providing a buffer on the downward slope in production. The very fact that there is a strong limit on the rate of production of heavy oil will ensure that it remains a factor for a long time - 100 years or more. Note also that these oils, while being expensive to produce, are also very expensive to process, requiring much more catalytic cracking than even the heavy grades of conventional oil.
Category (e) is hardly produced at all. i think the only commercial use is in one of the Baltic States, courtesy of investment by the Soviet Union back in the days of Stalinist central planning. The basic problem it runs into is EROEI (energy return on energy invested), which I will discuss later. It is notable, however, that people interested in exploiting this resource have consistently found that they can't make the economics work. Whenever they do their financial analysis, they've always found that it requires an oil price 20-50% greater than the current one.
We are left with category (d), tight oil. This is the one which has been increasing rapidly lately, so we need to look at it to see whether it will continue to increase and, if so, how far and for how long.
Tight oil deposits have been well known for a long time, but they were considered uneconomic until very recently. Two things have changed that. One is the rising price of crude oil and the other is technological change - in this particular case, the development of horizontal wells and fracking. Production of tight oil has been rising rapidly in the US and there is much interest in exploring for it in similar geological formations in other countries.
Now, it's not called "tight oil" for nothing. It has that name because the oil adheres quite closely to the rock in which it is embedded and doesn't flow easily like conventional crude oil does. Getting a commercially viable amount of oil out of the ground depends on fracking, which creates fissures through which oil can be extracted and pumped to the surface. The long term effect of tight oil on the date of Peak Oil depends crucially on the proportion of Oil in Place that can be recovered with known technology. If it's 10%, it will delay Peak Oil significantly. If it's 1%, it will peak itself very shortly and dash the hopes of the cornucopians (as Peak Oilers call those who deny the validity of the theory - a favourite saying of theirs is "The Stone Age didn't end because we ran out of stones").
From what I've seen, and I must admit to being an interested observer rather than a petroleum geologist, recovery rates of tight oil look being a lot closer to 1% than to 10%. A key consideration, and one which definitely merits separating tight oil from conventional crude in energy analysis, is that the decline rate is much higher. The decline rate is the rate at which production from a given well declines over time due to depletion of the resource and the consequent drop in pressure in the well. Conventional oil wells tend to have decline rates in the region of 2%-10% per annum. Tight oil wells have decline rates from 30%-70% per annum.
The high decline rates of tight oil wells mean that production can only be increased by a continual and exponential increase in the number of wells. This exponential growth in wells must sooner or later (and I believe sooner) run into some limits. This ie especially because the oil companies which have been drilling them have naturally drilled the most prospective locations first and average returns from wells drilled recently haven't matched the very attractive returns from those drilled in the first few years of the technology. I believe that tight oil production in the US will peak in the next year or two and, because of that, total US oil production will peak.
Tight oil production is only a substantial feature of the US at the moment, because of the legal framework. In the US, natural resources are the property of the landowner. In the rest of the world, natural resources below a certain depth from the surface (e.g. 10 or 20 metres) are the property of the State. As a result, royalty payments in the US go to the landowner, while elsewhere they go to the State. The effect of this is that landowners in the US are much more amenable to resource development than elsewhere, becausse they have a financial interest. In the rest of the world, there is no financial incentive for a landowner to ignore negative environmental effects.
And this is where fracking comes in. Its environmental drawbacks and dangers are well known, so I won't discuss them. What is relevant, however, is that the resulting community opposition has so far prevented production taking place outside the US. While opposition will probably eventualy be overridden by governments in the service of corporations, it will delay and obstruct development of tight oil so that it won't expand quickly and, quite possibly, will impose limits on the level of its economic viability. The effect on Peak Oil will, therefore, be similar to the effect of heavy oil. It won't delay the peak, but it will provide a buffer on the downward slope.
OK. We've discussed the various types of unconventional oil. I believe that the only category which is relevant in delaying Peak Oil is US tight oil and that it will only continue to delay the peak for a couple more years. What's left to discuss is the following list:
1. Production costs.
2. EROEI.
3. Alternatives to oil.
1. Production costs. Ralfy and S. Artesian have been talking past each other on this. Ralfy's figures are the ones wiith which I am familiar, so I was wondering where S. Artesian was getting the much lower figure he/she was quoting. Then I read post #38, which defined production costs as "lifting costs". Ralfy's figure includes not only lifting costs, but also capital amortisation, which is these days the single largest expense in the industry.
Once upon a time, oil could be obtained by drilling down a relatively short distance, a couple of hundred metres or less, and just taking off the oil as the pressure in the well forced it to the surface. This was dirt cheap and required very little capital investment. The vast majority of the cost of production was lifting it to the surface and putting it into a barrel, a tanker truck or a pipeline. Today, however, it's different. To find oil, you have to drill kilometres into the Earth. And then you need to drill sideways, at multiple points, in order to get the most oil you can out of the well. This requires much more complex technology in order to prevent things going wrong, especially considering the high temperatures and pressures deep below the Earth's surface. If the well you're drilling is under the sea, you have the added complication of floating rigs and preventing sea water contamination of the drilling machinery. On top of all this, you have to allow for the fact that many exploration wells are dusters - they come up with nothing. A few years ago, a joint venture being led by Chevron spent over $US100m on two exploration wells in a new field off the coast of Western Australia - and found nothing. Ouch. Not even Big Oil is prepared to continue in the face of results like that. The field was abandoned - but to stay in business, Chevron has to recoup the exploration costs of dry wells from the profits of its other wells.
S. Artesian's perspective is relevant to how an oil company will react in relation to its existing production fields - exploration & development are sunk costs, so under pressure, they'll maximise production as long as they can cover lifting costs. Ralfy's perspective, however, is more relevant to the long term. A corporation won't drill unless it expects it can recover the entire cost - capital amortisation as well as lifting costs - from the well under consideration. And, given decline rates from existing fields, wells need to be drilled just to keep production up, even before considering any increase. Therefore, Ricardo's theory applies - the price will be determined by that which is required to bring the most expensive oil to market and meet the demand. As, over time, the remaining oil becomes more difficult to find and develop production wells for, the price on the oil exchange will increase. Any remaining low cost producers will make a mint.
2. EROEI. In the long run, EROEI counts. In the short run, what counts is the money cost. EROEI counts in the long run because it underlies the money cost, with a time delay.
If you want to use oil by burning it (e.g. inside a car engine), it makes no sense to do so if you get less oil out of the ground than you have to burn getting it. You'd be better off putting your present stock of oil in your car instead. That's the basic point of EROEI - how much energy you get back in return for what you're spending.
In the real world, however, that basic point is subject to a number of complications. The first is that there are different sources of energy, which are partially but not totally substitutable for each other. You can, for example, run a car on LPG - and, in Australia, many do. I think all taxis in Australia now run on LPG. There is also electricity, which if it doesn't come from a diesel generator, can be used as an input to oil production instead of oil itself. This demonstrates that, while the EROEI of oil itself is significant, it is the EROEI of the wider energy industry which is the fundamentally determining factor. You really only want to use one form of energy to produce a lesser amount of another form if there is a definite advantage from doing so (e.g. you can carry petrol around in your car's petrol tank, but you can't get a good enough battery to make it worthwhile carrying electricity around).
AndrewF above argues that a falling EROEI is meaningless. This is a mistake. It's a measure of how much effort has to go into producing the energy society needs. The fall from 100:1 to 20:1 hasn't had much of a visible effect, because we can still have most work in society being devoted to other pursuits, while the increase in the social resources devoted to acquiring energy has been hard to divide into the part coming from increasing energy production and the part coming from declining EROEI. Once the EROEI ratio declines past 10:1, though, we will find a rapidly increasing number of people will have to work in the energy industry and thus we will have fewer social resources available to produce other goods and services.
Another complicatiing factor is time. The machinery used in the oil industry has been produced using energy sourced with a particular EROEI, which is built into the price. This means that a project with a bad EROEI can look good financially, since its capital costs are determined by the higher EROEI that prevailed previously. In the long term, however, this won't prevent EROEI having its effect. It will only delay the inevitable. Eventually, the poor EROEI of a project will mean its projected income will be less than its projected costs, so it won't go ahead.
3. Alternatives. Doomers in the Peak Oil community can't imagine any alternative and therefore imagine impending disaster. When you first discover Peak Oil, they can be persuasive, since the more intelligent of them are good at spotting the blockages (economic, social and technical) in the road of the alternatives. If you hang around a Peak Oil web site for a few years, however, all it takes is a reasonable memory for you to be able to see that there is something wrong with their methodology. If the doomers were right, you see, the collapse would have happened already. Since there's been no collapse, they must have made a mistake somewhere along the line.
In fact, the doomers' predictions are riddled with errors, all of which can be laid down to a failure of imagination. They didn't see tight oil coming. I didn't, either, but I wasn't predicting doom as a result. They don't see the ability of society to adapt through higher energy efficiency*, they don't see the ability of renewable energy to become a large and reliable resource, and they don't see the ability to change society so that ingrained consumption patterns (and the institutions that drive them) are eliminated.
What is necessary, therefore, is to make a clear distinction between a rational analysis of oil supply and an analysis of the economic and social consequences. Ocelot's contribution at #44, for example, is not an argument against Peak Oil. It is, rather, an argument that Peak Oil will (or at least, can) have economic and social consequences very different from those that the Peak Oil doomers predict. On that point, and since this is already a long post, I'll just say that I agree with that position.
* As a side note, Jevons' Paradox only applies in circumstances where the resource in question is abundant. Increased efficiency in use of abundant resources will lead to increased consumption, as you can achieve more in the way of useful results from such consumption. On the other hand, in situations of constrained supply, increased efficiency serves as an alternative to price rationing. You can achieve the same useful results from a diminishing supply.
P.S. While Peak Oil will interfere somewhat with the IPCC's predictions of global energy consumption and therefore greenhouse emissions, there is more than enough coal to fry the planet. We'll need to stop consuming it well before we reach geological Peak Coal.
On the economics,
On the economics, amortization is indeed a production cost-- gradually writing down the assets over time is exactly what Marx evaluated in his analysis of fixed capital which is depreciated, "ideally," as it transfers its "sunk" value incrementally to the product during its lifetime. Realistically, depreciation also occurs when the socially necessary time for reproduction of the commodity is reduced due to technical innovation, economies of scale, etc. and then the previous value embedded in the means of production cannot be recovered through the price of the commodity.
If we're going to argue that amortization costs are the driver of production costs, I for one would like to see the data, because the data from the US Economic Census Bureau's Quarterly Financial Report shows that depreciation, depletion, and amortization of property plant and equipment amounts to between 2 and 3 percent of total operating expenses in 2013, a rate that stands below the approximate 4 percent rate of 2002.
The QFR database is available at https://www.census.gov/econ/qfr/historic.html.
And just to put the grit next to the nits-- when Iraq was soliciting bids for development and operation of its oil fields, the first round or two didn't go so well-- lack of interest by some, but also Iraq rejected most of the bids as the operators were requiring a payment rate from the government of about $1.25-1.50 per barrel of oil extracted. Following rounds did better as the government accepted bids where the price demanded per barrel extracted. As far as I was able to determine that was NOT $1.50 or $1.00 in addition to the costs of production, but per barrel produced.
ocelot wrote: That's the
ocelot
I don't think the point of seeing peak oil as a physical reality is to see other factors concerning capitalism as irrelevant. Rather, it it is understand one of those factors, i.e., that which involves energy and material resources.
The point is not to see peak oil as merely technical but to see that in light of oppression and other factors.
There are two views that question peak oil. The first is that peak oil is a hoax or won't happen because we have lots of reserves available. Unfortunately, reserves is not the same as production rate. That's why we're now using more unconventional oil even with lots of crude oil still available.
For the second view, renewable energy can easily replace fossil fuels. The problem is that energy returns for renewable energy are much lower and oil is still needed for renewable energy.
Finally, in order to prove that peak oil is not a fact, one needs to show that oil is an infinite resource.
My view is the opposite. By showing that something can be done, people will be complacent and assume that someone will come up with a solution easily.
That's exactly the purpose of discussing peak oil. To argue that something can be done means that we can replace oil with something else and allow the same global capitalist economy to continue. To argue that nothing can be done shows that the same global capitalist economy cannot continue.
I agree! The problem is that if we think that peak oil won't take place or won't take place after a long while, then this challenge will not take place.
Also, all of the evidence that I've presented shows that peak oil has taken place.
Exactly! Peak oil shows that that resources are limited. By doing so, we come up with the means to prepare accordingly.
In addition, even with resources are shared equally, there will still be not enough, simply because resources are limited:
https://en.wikipedia.org/wiki/List_of_countries_by_ecological_footprint
That is, bio-capacity will be limited by available resources and population, and the earth has a particular carrying capacity. At the same time, that bio-capacity can be decreased by increasing population combined with environmental damage.
Why do you keep referring to it as a conspiracy? Crude oil production peaked in 2005. Oil discoveries peaked in 1964. U.S. oil production peaked in 1970. Per capita oil production peaked in 1979.
Finally, keep in mind that technocracy for this topic can work both ways. That is, one can argue that peak oil hasn't or won't take place because technology can be used to easily find more oil. Or in case this is not possible, then technology can be employed to find other sources of energy to easily replace oil.
S. Artesian wrote: Ralfy, I'm
S. Artesian
Capital expenditures are going up because bringing in new oil is becoming more expensive. The reason for that is that the easy oil is gone. That's peak oil.
Exactly.
Please provide sources other than an FAQ from the EIA referring to 2009 data showing the production cost of oil sands, shale oil, and crude oil.
Please give more details on these profitable methods.
About the effects of peak oil taking place before production drops, that's very obvious. When you have a drop in oil production while demand continues to rise, then you have higher oil prices. When you have an increase in oil production while demand rises faster, then you have higher oil prices. Higher oil prices is one of the effects of peak oil.
How is production expanding? Crude oil production has now dropped to 2005 levels and the average production rate has been in a 73.4 Mb/d plateau since 2005. Do you have evidence that crude oil production will soar in the future?
It wasn't felt then because oil demand did not rise as much. Now, we have a growing global middle class, such that we will need one Saudi Arabia every seven years to maintain economic growth, and more to meet the needs of the same middle class.
Please present another forecast that works contrary to what Hubbert said.
Focus on production rate rather than amounts produced or reserves. Then see that in light of consumption rate and demand.
Better yet, consider production per capita globally. I gave one link concerning that involving several data sets.
That's assuming that most of the reserves are nearer the surface and are as easy to obtain as what was extracted initially. This, of course, cannot be assumed, which is why U.S. oil production peaked in 1970.
For peak oil, focus on production rate rather than on reserves.
I don't understand the point about the end being near, but the point about the peak taking place has already been proven. Or do you evidence showing that crude oil production did not drop to 2005 levels, or that it will rise significantly in the near future?
S. Artesian wrote: About that
S. Artesian
Focus on production rate rather than reserves. The reason for that is explained here:
"The only true metric of energy abundance: The rate of flow"
http://www.resilience.org/stories/2013-04-28/the-only-true-metric-of-energy-abundance-the-rate-of-flow
Thus, for production, one can look at the ff:
http://crudeoilpeak.info/world-crude-production-2013-without-shale-oil-is-back-to-2005-levels
The second chart comes from the EIA. World crude oil production peaked in 2005. The article also contains charts referring to production in various regions.
For the U.S., Mexico, and others, try
http://crudeoilpeak.info/us-peak
again with information from the EIA and other sources on U.S. crude oil, tight oil, etc. Take a look at production per well, U.S. oil production peaking in 1970, etc.
there are more regions discussed in various pages. For example, for Russia,
http://crudeoilpeak.info/russia-peak
with data from the EIA, the IEA, and others.
Also, why refer only to the EIA? There are more sources of data to consider. For example, try
http://cassandralegacy.blogspot.com/2013/07/peak-oil-what-peak-oil.html
which looks at per capita production using data from the EIA, the IEA, and more.
For world oil production, consider the IEA report from 2010:
https://www.iea.org/publications/freepublications/publication/name,27324,en.html
One article about the report:
http://www.resilience.org/stories/2010-11-10/iea-world-energy-outlook-2010-now-out-preliminary-look
S. Artesian wrote: On the
S. Artesian
From what I know, increasing capital expenditures concerning this topic involves higher costs in extracting new oil. More details are given in this presentation:
https://www.youtube.com/watch?v=dLCsMRr7hAg
Points about the presentation are shared here:
"Beginning of the End? Oil Companies Cut Back on Spending"
http://www.resilience.org/stories/2014-03-04/beginning-of-the-end-oil-companies-cut-back-on-spending
ralfy wrote: That's exactly
ralfy
to claim that capitalism can't replace oil and carry on is quite absurd, its contrary to the history of capitalism where multiple sources of energy have been replaced and ignores the fact that replacements already exist. I thought we had seen the end of this bullshit, i thought people would have noticed the increase in things like franking and the steady increase of renewable generating capacity and realized that the forecasts of the end where vastly over stated. But no instead you claim we should base our ideas about the world on how the think people will react, rather then the reality of the situation.
S. Artesian wrote: If we're
S. Artesian
Sorry, but I couldn't find the info for the oil & gas industry in the URL supplied. The tables I found were for much broader industries. Maybe I didn't look in the right place. Any chance of some more detail?
What I did find, however, was the BP 2013 Annual Report:
http://www.bp.com/en/global/corporate/investors/annual-reporting.html
Without printing everything out & poring over it, I can't get all the information I'd like to see, especially since I'm used to looking at reports put together on the basis of Australian Accounting Standards. What I did find, however, was interesting.
BP Upstream Sales & Other Operating Revenue (AR pp150-152):
2013 $70,347m
2012 $72,225m
2011 $75,754m
Selected Expenses (AR pp 150-152) ($m): 2011 2012 2013
Depreciation, depletion & amortisation -
. US ...................................................... 3,201 3,437 3,538
. Non-US ............................................... 5,540 6,918 7,514
Impairment Losses ................................. 1,443 3,046 1,255
Impairment Reversals .............................. (146) (289) (226)
Total ................................................ 10,038 13,112 12,081
% of Sales ............................................ 13.3 18.2 17.2
Note that this does not include exploration expenses, which I found discussed at p28. The discussion is unclear, because two different sets of numbers are quoted. The larger one is described as "Exploration and appraisal costs" and includes capitalised expenses (which, if you're counting depreciation & amortisation, you should exclude to avoid double counting). The smaller set is described as "Exploration expenses" and looks like it is what would have been charged directly against the Profit & Loss Account. The figures there are:
2011 $1,520m
2012 $1,475m
2013 $3,441m
Adding these in, you get the following "pre-lifting" costs:
........................ 2011 .......... 2012 ......... 2013
Pre-lifting ..... $11,558m ... $14,587m ... $15,552m
% of Sales ........15.3 ............ 20.2 ...........22.1
These figures are very much higher than the "lifting costs" that S. Artesian is quoting and thus support my contention that the price of oil is driven primarily by the need to be confident of recovering sunk costs, which are rising as oil gets harder to find and extract.
It should be noted that these figures are for BP's entire upstream portfolio, which these days is split around 60/40 between production of oil & gas, when compared on a "barrels of oil equivalent" basis. A final point to note is that the figures quoted above are averages for the whole portfolio and include old fields with much less capital equipment and capital expenditure to amortise. What counts in terms of getting new oil coming to market is what it costs for the wells they're drilling now. I won't adjust the figures above, because though they're obviously going to be higher, any adjustment I make would be completely arbitrary. More digging in the report may reveal what they're having to spend in order to replace their reserves - I've seen discussion on Peak Oil sites about industry CapEx going through the roof in recent years, but getting results that are mediocre at best. If I find anything useful, I'll post it.
S. Artesian
It's late and I have to get to bed, but I have to say that these figures don't make sense to me. I can't see how they'd even cover lifting costs.
P.S. A word about "proved reserves". Movements in this figure aren't the same thing as discoveries, because in order to meet stock exchange reporting requirements, they have to have a high level of confidence that the oil is there and can be extracted commercially. Doing this, however, costs money, so the oil companies only prove up as much oil as they need to at any one time. There are wider categores like "probable reserves" and "possible reserves" and the usual course of events is for the resources to be moved from "probable reserves" to "proved reserves" in order to replace production, while "probable reserves" get run down (though I must admit that I'm far more familiar with this operating in the coal industry, where I've studied some firms' Annual Reports in depth). If I find some data on that, I'll post it as well.
Ralfy: Quote: Capital
Ralfy:
Really? Capital spending for petroleum and coal production in the US tripled between 1937 and 1970. Significant right? Must have been the pre-impacts of peak oil, right? Except you know what? Capital expenditures for all manufacturing in the US increased 22 fold in that same period. So what? Correlating increased capital expenditures with ease or difficulty of production is a bogus endeavor. What counts is profitability, and the allocation of profits among producers.
The easy oil is gone? Why? Because in the classic Ricardian (non)sense-- "the most fertile land is farmed first" or the "easiest minerals are extracted first"??-- which assumes some sort of linerar progression of production and technology. Except that's not how it has actually worked. Capital costs per barrel of oil extracted in the US were higher at the outset of production than in later years because while the oil may have been closer to the surface, the overall development of the productive apparatus was not "easier."
Accessing the "easiest" sources is dependent upon the level of technological development. Accessing Pennsylvania oil in the 1870s was not easier or cheaper than accessing Spindletop in 1901.
The point being there is a relationship between supply, reserve, and the technology of accessing the supply, which is to say the economics of accessing the supply.
Capital expenditures are not determined by the finiteness of supply, but by the profitability of production. Same reason US production peaked in 1970-- profitability; the rate of profit had turned down for the US oil majors in 1969.
SA:
Ralfy:
Exactly what? Are you now arguing that peak oil determines transportation costs, rather than market conditions, tanker operating costs, tanker capacity, rail capacity, pipeline availability?
Ralfy:
Nope. Not until you provide the data directly, with the reference cited, for your claims about production costs. Including amortization.
expanding?
You can find discussion of these in the annual reports of the petroleum majors, or on the EIA website. Help yourself.
Ralfy:
Huh?? If you have a drop in oil production and that's an effect of peak oil, that means it cannot have occurred before the peak, since the approach to the peak is a consistent upward move in production.
If production is increasing, but cannot keep up with consumption, that is not an impact of the peak, that's an impact of the allocation of capital.
Ralfy:
This sort of comment makes the value of further discussion questionable. Petroleum production is at or near 89 million barrels/day. You want to eliminate tight oil, deep water oil, tar sands production from that number? Peak oil is supposed to represent an insurmountable obstacle to hydrocarbon extraction. PERIOD. No amount of investment, no amount of "unconventional sources" is supposed to be able to offset the immediate, imminent, already evident (pick one or more) arrival of the peak. Oh... and check out the spare capacity among OPEC producers-- I think it is at or near 10%-- that's conventional production spare capacity.
SA:
Ralfy:
Really? You think. Well here are the total oil supply WORLD average daily figures for various eight year periods:
1993-2000-- 67.6 million bbl/day to 76.8 million/day, equal to 11.4% increase
2001-2008-- 77.5 million bbl/day to 84.7 million/day, 9.3% increase
2005-2012-- 84.1 million to 89.4 million, 6.3% increase
Total 1993-2012- 32.2% increase in consumption
Rate of increase is slowing, as is the increase in the absolute quantities, so obviously if we are feeling peak oil now it's because of...........absolute limits, right? So let's see if there's a decline in production not proportionate to the slowdown in consumption.
1993-2000 67.1 million/day to 77.7 million, 15.8% increase
2001-2008 77.7 million to 85.4, 9.9%
2005-2012 84.5 to 89.3 5.7% = 33% increase in production
So for a 20 year period, production matches or exceeds consumption. So where's the peak here? Remember, you're claiming we are past the peak.
Sure thing. The USA, for one, the rest of the world for the other. See Chapter 4 of Gorelick's Oil Panic and the Global Crisis, "Counter-Arguments to Imminent Global Oil Depletion."
I'll start you off:
The peak of course occurred not in 1965, but 1970, and Hubbert had underpredicted the peak value, production per year by 25%.
And after the peak? Hubbert predicted production in 2008 would be .5 billion barrels when real production was about 1.55 billion barrels.
And we could go on and on-- but this about sums it up: "Departing from the exponential trend of the Hubbert curve through 1980, the actual trend of oil production has since been replaced by a linear one that has been fairly consistent over that last 26 years. It turns out that oil production from 1983 through 2008 has growing simply in proportion to the global population increase."
Do not forget Hubbert's peak is based on a curve, a bell curve where production rates increase at a non-linear rate. The difference? The difference is according to Hubbert's prediction, world production should have been at 50 billion barrels per year in the current period, which corresponds to his peak period. Production has not matched that curve, and now stands at about 32 billion per year.
So those who support Hubbert's peak, his methodology, his curve, and claim he was right in calling the peaks, have to account for that the curve has not been accurate, predicted production rates have not been accurate; predicted declines in production rates from so-called peaks have not been accurate. Other than that, Hubbert got it right, I'm sure.
Quote: Sorry, but I couldn't
You go to the page. See the hypertext where it says "Historical QFR data PDF format"? pick a quarter of year. Then since the QFR combines petroleum and coal, go the page that has the balance sheet data for that classification. Check depreciation, amortization, depletion vs. total operating exprenses. Do that for 2002, do that for 2013, (you might have to go to the page that has the link to the current data. It's there.
What you did not provide in your citing of the BP report is the relation of depreciation to operating expenses.
As for finding costs-- those are not production costs. Nevertheless I identified the increased finding costs and even with that added in the costs are about half of what Ralfy says they are.
You have not provided any reference or any data to support your claim that amortization is the largest cost the oil producers incur, nor that those costs are driving the price of oil.
Re Iraq: How does $1-$1.25
Re Iraq: How does $1-$1.25 cover lifting costs? That's because lifting cost in Iraq are less than $1 /barrel. That's how much oil there is and how easy it is to get to it.
Here's an article I found re
Here's an article I found re Iraqi oil leases. Apologies for my poor memory-- the dispute over price was with those demanding more than $5 barrel, not $1 barrel, but as you will see Exxon and Shell have agreements with Iraq where they get less than $2 per barrel:
EIA: AEO2014 EARLY RELEASE
EIA: AEO2014 EARLY RELEASE OVERVIEW
Of course this is for the USA alone. But then again I believe it is an article of faith amongst peak oilers that peak oil happened in the US in 1970, no?
But enough of this "my links
But enough of this "my links trump your links" Aspergers nonsense. Back to politics...
ralfy
Seeing the issue as not "merely" technical, but "that [technical] in the light of oppression and other factors" is still seeing it as a technical-geological issue, rather than one produced by the social relations of capital. As you make clear later on...
ralfy
Again, you can only see technical problems and technical solutions in isolation. If there are no technical solutions to capitalism's resource-usage crisis (which is an environmental crisis caused by over-supply of fossil fuels, not undersupply - Monbiot's comment that "there is more than enough oil in the ground to deep-fry the climate" is essentially correct), you assume that must also mean there are no technical solutions, full stop. The real problem is the technical solutions are less profitable than fossil fuels - the problem is political-economic, not technical.
The "something that can be done" is to overthrow capitalist relations and replace profitable fossil fuel burning with sustainable, but unprofitable renewables. One thing's for sure, overthrowing capitalism is not going to be done by convincing people that "someone will come up with a solution easily". It's also not going to happen by conspiranoids/"doomers" telling people that "nothing can be done" and its all basically a problem of geology and physics - which naturalises and eternalises the specific relations of capitalism in a completely reactionary, Malthusian way.
ralfy
The notion of a physical limit ratio of "hectares per person", i.e. "biocapacity", is utter reactionary Malthusian bollocks. It assumes present consumption patterns of people living in a wage-labour, commoditised, privatised social system, as somehow ahistorical and natural. Down this road lies primitivist genocidal thinking and ignorant conspiranoid pseudo-science.
ralfy
Except it didn't. You just keep redefining the definition of "crude oil" to keep your conspiracy alive.
It's a conspiracy because you believe if only the world knew the indisputable "facts" about peak oil (911, the lizards, the global Jewish Conspiracy, take your pick...) then they would be forced to do something, things just couldn't continue as they are any more... ("WAKE UP, SHEEPLE!") - or alternatively, you don't even need people to act, because the automatic breakdown (Zusammenbruch - some Marxists do this shit as well) will change everything without having to go through the hard work of actually building real movements with real power/agency for change. NB, you seem to vacillate between these two contradictory poles - on the one hand you are afraid of people remaining complacent, on the other hand, there's nothing to be done - so what's wrong with complacency then?
ralfy
Strawman. And symptomatic of utter political fail.
No-one has said that oil will not eventually run out. We just have said that it's production has not yet peaked. See all the actual figures (which I graphed above). We are also saying that fossil fuels will not run out before we have released enough CO2 into the atmosphere to make running out of fossil fuels the least of our worries. So eventual peak oil (whenever it finally comes) is irrelevant, in terms of the resource-usage threats posed by capitalism.
Guardian: Fashion-conscious
Guardian: Fashion-conscious men warned we may have reached 'peak beard'
Sorry. Couldn't resist.
S. Artesian wrote: Really?
S. Artesian
Listen to Kopits' lecture and you will see recent data on capex.
You are not disproving my argument.
What you are looking for is production rate and demand. The first has flattened out, which is what peak oil is about, and which is why we are now resorting to shale oil. The second continues to rise.
According to the IEA, we will need the equivalent of one Saudi Arabia every seven years to meet demand. To meet a growing global middle class, we will need one every three to four years. More details can be found in my previous links.
It's determined by both, and latter affected by the price by which the market is willing to buy more oil. Again, see the lecture linked earlier for details.
Of course. How do you think crude oil is transported worldwide?
All these were given to you earlier. It's now your turn to prove otherwise. The only data you gave came from a FAQ from EIA referring to 2007-2009 data. Consider more recent data.
Production for the five major players have dropped 25 pct.
The EIA data you have provided so far refers to 2009 data.
One of the effects of peak oil is higher oil prices. Oil prices can go up when oil production cannot meet demand. That can happen without oil production dropping.
That's why oil prices tripled and we are now using shale oil. Conventional production has flattened out. See my first link in this thread for details. The info comes from the EIA.
Please explain how capital is not being allocated correctly.
Peak oil refers to a peak in production for any source. Conventional production has peaked, as predicted by Hubbert and confirmed by the IEA and the latest chart shown to you from the EIA. Why do you think we are now using shale oil to meet demand that crude oil can't?
As for spare capacity, my understanding is that it has been less than 10 pct for more than a decade:
http://www.businessinsider.com/oil-spare-capacity-2013-2011-2
The peak is taking place for conventional production. See the EIA data presented here for details:
http://crudeoilpeak.info/world-crude-production-2013-without-shale-oil-is-back-to-2005-levels
Conventional production has peaked at 73.4 Mb/d.
Unconventional production will not last. See my previous links for details.
Consumption continues to grow. See the link about peak demand for details.
The expected production rate needed to meet future demand is between one Saudi Arabia every seven years (see the IEA 2010 report for details) to one Saudi Arabia every three to four years (see the Guardian article shared earlier).
U.S. oil production peaked back in 1970, as Hubbert predicted.
In 1976, Hubbert argued that crude oil production would peak in 1995 + 10 years, or 2005.
In 2010, the IEA confirmed that crude oil production peaked in 2005.
Just recently, EIA data showed that crude oil production peaked at 73.4 Mb/d.
S. Artesian
S. Artesian
I am not referring to "finding costs" but to total costs, assuming that they will be passed on to oil buyers.
ocelot wrote: EIA: AEO2014
ocelot
U.S. crude oil production peaked in 1970. See the brown region in the chart.
Also, look at the trend for total production.
ocelot wrote: But enough of
ocelot
Giving evidence is part of proving one's point.
But it is a geological issue, unless you believe that crude oil production can be ramped up easily, and is not being done only for political reasons.
The reason why these technical solutions are less profitable is because their energy returns are lower. That's not a political or economic issue.
Also, Monbiot's article refers to Maugeri. Consider various assessments of Maugeri's arguments. For example,
http://www.davidstrahan.com/blog/?p=1570
FWIW, when I argue that nothing can being done, I am referring to capitalism (free market, state) as unsustainable. And it is primarily unsustainable because of peak oil, among others.
That's why when you read my post about that, I talk about localization, the use of renewable energy, etc. That's the result of capitalist systems falling apart.
Finally, keep in mind that it's not just peak oil that's a matter of physics and geology. Even global warming and environmental damage involve the sciences.
Again, I am not arguing that we should ignore politics or economics. It's just that the topic of this thread is peak oil, and I don't think a change in governments, increasing money supply, etc., will ramp up conventional production indefinitely.
The physical limit is based on science. In fact, the same science is used to study peak oil and, global warming, and environmental damage.
Higher or lower levels of consumption will not change that biocapacity. And the fact that consumption has to decrease to meet biocapacity proves my point further.
The only way to disprove this is to show what technologies will allow for continuous increase in resource consumption exceeding bio-capacity.
Finally, what you are referring to in your last sentence is the reaction to this scientific fact and not the fact itself.
The chart in the EIA executive summary which you shared recently proves my point.
You're not disproving my argument. By showing that it is a political issue, you are implying that peak oil in terms of geology is wrong.
According to the same EIA, crude oil production peaked in 2005. See the article I shared in my first post.
According to the EIA report you shared earlier, U.S. crude oil production peaked in 1970. Also, look at the trend line for U.S. total production.
ocelot wrote: Guardian:
ocelot
This was shared earlier, with lots of details and references to multiple organizations, including the EIA:
"Former BP geologist: peak oil is here and it will 'break economies'"
http://www.theguardian.com/environment/earth-insight/2013/dec/23/british-petroleum-geologist-peak-oil-break-economy-recession
Also, in reference to global warming:
"World headed for irreversible climate change in five years, IEA warns"
http://www.theguardian.com/environment/2011/nov/09/fossil-fuel-infrastructure-climate-change
Thus, we see the effects of both peak oil and global warming.
ralfy wrote: Quote: It's a
ralfy
The problem is you don't have any politics and thus you don't really have any point. Just an obsession. And you clearly hope that the object of your obsession will somehow magically substitute for politics ("is scientific, innit?"). It won't.
ocelot wrote: The problem is
ocelot
Please explain what aspect of politics will reverse the physical realities of oil (not to mention other material resources such as fresh water and various minerals) and energy return.
ralfy wrote: ocelot
ralfy
You have demonstrated precisely nothing of "the physical realities of oil."
"Easy oil" is not "gone,"
"Easy oil" is not "gone," hence Iraq's refusal to pay $5/barrel to the majors to extract oil from their fields that can be extracted for $2 barrel or less.
Crude oil production did not peak when or how Hubbert predicted; production has not declined as Hubbert predicted; the depletion of reserves has not declined as Hubbert has predicted... but don't let anything like the facts get in the way of your ideology.
S. Artesian wrote: You have
S. Artesian
On the contrary, I've shown precisely that.
S. Artesian wrote: "Easy oil"
S. Artesian
Easy oil is gone, as shown in Charles Hall's argument.
Crude oil production peaked, as shown in EIA data presented to you.
Hubbert predicted that correctly, as shown in the 1976 interview shared earlier.
The IEA confirmed that in 2010, and BP data shows the same.
Peak oil has to do with rate of flow, not reserve depletion.
My arguments are not based on ideology but on facts.
Peak oil has everything to do
Peak oil has everything to do with reserve depletion; read the literature. Read Campbell, Deffeyes, Laherrere.
Oil production did not peak in 2005. It has increased since then. You don't happen to like that the increase comes from tight oil supplies; or other "unconventional sources" like tar sands.
Further discussion with you is pointless.
S. Artesian wrote: Peak oil
S. Artesian
Reserves cannot be used up wholly for obvious reasons. Rather, production rate goes down when as oil becomes increasingly expensive to access, and that will take place long before reserves are fully depleted.
That's why crude oil production peaked in 2005. See the second and third charts featured here:
http://crudeoilpeak.info/world-crude-production-2013-without-shale-oil-is-back-to-2005-levels
The data comes from the same EIA mentioned frequently in this thread.
Crude oil production has stayed in a 73.4 Mb/d plateau since then.
Hubbert predicted that in 1976:
https://www.youtube.com/watch?v=ImV1voi41YY
and the IEA confirmed it in 2010:
http://www.resilience.org/stories/2010-11-11/iea-acknowledges-peak-oil
The fact that we are now resorting to shale oil proves my point further. Otherwise, crude oil production should be increasing readily, and there would be no need to use shale oil.
Shale oil will not last:
http://www.slate.com/articles/health_and_science/science/2013/02/u_s_shale_oil_are_we_headed_to_a_new_era_of_oil_abundance.html
Even the EIA acknowledges that shale oil production will peak after only a few years:
http://www.cnbc.com/id/101276526
What about total oil and gas production, both conventional and non-conventional? The IEA reports that it will increase by only 9 pct during the next two decades:
http://www.worldenergyoutlook.org/publications/weo-2010/
and that's assuming that crude oil producers go for maximum depletion rates, something which is not likely given increasing capital expenditures (as explained in the lecture shared earlier). As it is, production for the five major players have dropped by 25 pct since 2004:
http://www.theoildrum.com/node/9946
Meanwhile, as the same report reveals, demand is expected to increase by around 2 pct every year, which mean the 9-pct production increase will obviously not be enough.
Finally, oil sands, coal, and other sources of non-conventional production will contribute to increasing CO2 emissions:
http://www.theguardian.com/environment/2011/nov/09/fossil-fuel-infrastructure-climate-change
which means we face both peak oil and the effects of global warming.
sans commentaires... FT:
sans commentaires...
FT: Booming output sends US crude below $100
That's for WTI. For Brent,
That's for WTI. For Brent, it's more than $108. Meanwhile,
"Shale Drillers Feast on Junk Debt to Stay on Treadmill"
http://www.businessweek.com/news/2014-04-30/shale-drillers-feast-on-junk-debt-to-stay-on-spending-treadmill
Also, "Total SA: Peak Oil Is
Also,
"Total SA: Peak Oil Is Catching up to Big Oil"
http://www.fool.com/investing/general/2014/04/23/total-sa-peak-oil-is-catching-up-to-big-oil.aspx
Note the points raised after the capex chart.
Which are simply that costs
Which are simply that costs of production, in terms of capex, are going up.
But what does that actually mean? It means that supply is not currently tight enough to allow producers to pass on rising costs via rising prices. And yet, rather than scale back capex into new production, restoring their free cash flow, dividends, p/e, etc, they consider the investment in new production worthwhile as they predict continuing demand for the product.
The naive view of rising production costs is the techno-optimist one that eventually petrochem costs will rise above current renewable costs and market forces will lead to a switch from oil to renewables within the "business as usual" dynamic. As I previously pointed out above, this does not take account of the different investment/transaction/return profile of oil as contrasted with renewables. Namely that oil provides a stable income stream in that each marginal unit of power requires a purchase of a marginal unit of commodity, whereas once renewable investments are sunk, marginal costs are effectively negligible and the argument for the power produced being a public good, are much harder to resist. Which is why, ultimately, the non techo-optimist prediction is that oil production will continue to rise, even with rising production costs, and will not, in and of themselves, lead to a widespread switch from fossil fuels to renewables by market forces alone.
And lets not forget, that if there's one thing capitalism is not about to run out of, it's accumulated liquid investment capital. Rising costs are not a problem, it's falling returns that are the issue - and the historical evidence is that the former does not lead directly to the latter in the way the bourgeois ideological view of economics as natural history would lead one to believe.
Interesting related
Interesting related piece:
Reuters: End of oil boom threatens Norway's welfare model
A bit of a multi-target piece. As well as the stuff about rising costs, both generally in the global industry, and specifically in Norway, there's some hilarious boss-wailing about "lazy" Norwegian workers who don't want to work (join the club!) and a gratuitous Scottish referendum side-swipe for good measure. Something for everyone here.
(There's also a little bit of local Irish interest with the revelation that Statoil, the Norwegian state-owned oil producer who has a big share in the Shell pipe project in Rossport, are concerned enough to make sure that gas projects in Norway are processed off-shore. So it's "shell to sea" for the scandies but a pipe's good enough for paddy...).
ocelot wrote: Which are
ocelot
That's peak oil. Capex is going up because new oil is becoming more expensive to obtain. This is even more pronounced for shale oil, where more wells have to drilled each time just to maintain production rates.
Prices aren't dictated by producers. The explanation is given in the Kopits lecture.
A techno-optimist view involves technology solving anything, either by keeping costs down or by allowing an easy transition other energy sources.
A realist view argues otherwise.
Exactly! Oil prices are not dictated by producers but by the market, and that market cannot tolerate very high prices. At the same time, producers are getting squeezed by higher capex.
That's why oil production for the five major players have dropped by 25 pct since 2005. That's why crude oil production has remained in a 73.4 Mb/d plateau even with a tripling of oil prices.
More details are given in the lecture shared earlier.
ralfy wrote: ocelot
ralfy
No it's not.
(global) Peak oil, as defined by Hubbert, is the peak of global oil production (as measured in Thousands or Millions of Barrels Per Day), after which output declines. That is, a global version of the peaks that have been seen in various local oil and gas fields around the world - for e.g. the North Sea, where production today is today 2/3rds below it's peak.
The global oil out put has not peaked - as demonstrated in the actual output figures. The fact that you continue to deny a simple fact is evidence that your belief system is theological rather than scientific.
ocelot wrote: ralfy
ocelot
Yes, it is. Production peaks and then declines because oil is more difficult to extract, and it's more difficult to extract because it requires more processing or is deeper.
That difficulty translates to higher oil production cost and capex.
Global crude oil production peaked in 2005. The data comes from EIA. Check the second chart in this article:
http://crudeoilpeak.info/world-crude-production-2013-without-shale-oil-is-back-to-2005-levels
Global oil production per capita peaked in 1979: The data comes from multiple sources, including the EIA, the IEA, and others. See the chart in this article:
http://cassandralegacy.blogspot.com/2013/07/peak-oil-what-peak-oil.html
Right, global crude without
Right, global crude without tight oil is back to 2005 levels-- so what? That's like saying global oil production without Spindletop, Saudi Arabia, etc etc etc peaked in 1907.
But isn't..I thought Shale
But isn't..I thought Shale etc. is just another bubble, innit?
“Insiders Sound an Alarm Amid a Natural Gas Rush”, The New York Times, 25 June 2011.
http://www.nytimes.com/2011/06/26/us/26gas.html?pagewanted=all&_r=1&
Wolf Richter, “Dirt Cheap Natural Gas is Tearing up the Very Industry that’s Producing It”, Business Insider, Portland, 5 June 2012.
http://mobile.businessinsider.com/capital-destruction-in-natural-gas-2012-6
“Shale Gas Will be the Next Bubble to Pop - An Interview with Arthur Berman”, 12 November 2012; www.oilprice.com
http://oilprice.com/Interviews/Shale-Gas-Will-be-the-Next-Bubble-to-Pop-An-Interview-with-Arthur-Berman.html
“Exxon: ‘Losing our Shirts’ on Natural Gas”, The Wall Street Journal, New York, 27 June 2012.
http://online.wsj.com/news/articles/SB10001424052702303561504577492501026260464?mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303561504577492501026260464.html
“US shale gas glut cuts BG Group profits”, Financial Times, London, 26 July 2012.
http://www.ft.com/cms/s/2bd8af54-d6f7-11e1-8e7d-00144feabdc0,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F2bd8af54-d6f7-11e1-8e7d-00144feabdc0.html%3Fsiteedition%3Duk&siteedition=uk&_i_referer=http%3A%2F%2Fmondediplo.com%2F2013%2F03%2F09gaz#axzz2Lv7vprgJ
“Debt-plagued Chesapeake energy to sell $6,9 billion worth of its holdings”, The Washington Post, , 13 September 2012.
http://www.washingtonpost.com/business/economy/debt-plagued-chesapeake-energy-to-sell-69-billion-worth-of-its-holdings/2012/09/12/6b973420-fd0e-11e1-b153-218509a954e1_story.html
“The economics of oil dependence: a glass ceiling to recovery”, New Economics Foundation, London, 2012.
http://www.neweconomics.org/publications/entry/the-economics-of-oil-dependence-a-glass-ceiling-to-recovery
After the recent debacle in
After the recent debacle in California where reserves were estimated to have been “inflated” by 2500% (a writedown of 96%) under new Security and Exchange Commission (SEC) rules introduced in 2009 that allow gas companies to claim reserve sizes without any independent third party audit, I think a little caution may be in order.
According to research by David Hughes at Post Carbon Institute - http://www.postcarbon.org/drill-baby-drill/ - for the two tight oil ‘plays’ in the US – the Bakken/Three Forks play in North Dakota and Montana and the Eagle Ford play in Texas – that provide more than 80 per cent of the country’s production, indicating the rarity of good fields, well-decline rates are between 81 and 90 per cent in the first 24 months. The annual costs to maintain production nationally are estimated at $35 billion. Oil production is projected to peak in 2017 and then collapse – providing a resource bubble lasting about ten years.
In the Arthur Berman article cited in the post above, a former Amoco (BP) geologist cites the same Eagle Ford shale site (in Texas - the “mother of all shale oil plays”), pointing out that the “annual decline rate is higher than 42%” so that just to keep production flat they will have to drill “almost 1,000 wells in the Eagle Ford shale, every year... Just for one play, we’re talking about $10bn or $12bn a year just to replace supply. I add all these things up and it starts to approach the amount of money needed to bail out the banking industry.”
According to Sir David King’s group at Oxford (David King and James Murray, “Climate policy: Oil’s tipping point has passed”, Nature, London, no 481, 26 January 2012.) production at these wells drops off by as much as 60-90% within the first year. They found that despite reported increases in unconventional oil and gas production by fracking, depletion of the world’s existing fields is still running at 4.5-6.7% a year. They categorically dismissed notions that a shale gas boom would avert an energy crisis.
ExxonMobil’s CEO, Rex Tillerson, complained that the lower prices due to the US natural gas glut, although reducing energy costs for consumers, were depressing prices and were thus often insufficient to cover production costs resulting in dramatically decreased profits. Although, in shareholder and annual meetings, the company had officially insisted it was not losing money on gas, Tillerson candidly told a meeting at the Council on Foreign Relations: “We are all losing our shirts today. We’re making no money. It’s all in the red”
The British BG Group was forced “to take a $1.3bn writedown in its US natural gas assets” due to the gas supply glut, “leading to a sharp fall in quarterly and interim profits”. By November 2012, after Royal Dutch Shell saw its earnings fall for the third consecutive quarter by “24% on the year”, Dow Jones reported the “negative effects in their earnings”, underscoring “how disruptive the shale boom of the past few years has been to the sector.”
According to the FT article above, producers have been spending “two, three, four and even five times their operating cash flow to fund their land, drilling and completion programmes.” To sustain this “deficit financing”, too much money “was borrowed, on complex and demanding terms. Wall Street should have provided reality checks to the shale gas people; instead, they just provided cashier’s cheques with lots of zeroes at the end.” And this bubble will continue growing due to increasing US dependency on gas-fired power. “Given the steep decline rates of shale gas wells, compared to conventional wells, drilling will have to continue. Prices will have to adjust upwards, a lot, to cover not only past debts but realistic costs of production.”
Arthur Berman suggested that “you may have a couple of big bankruptcies or takeovers and everybody pulls back, all the money evaporates, all the capital goes away.” In other words the premise of “peak oil” — the point at which geological constraints and economic factors combine to make the fluid fossils much more difficult and expensive to produce and so less profitable — is far from undermined by the shale gas/tight oil boom.
S. Artesian wrote: Right,
S. Artesian
Shale oil has lower energy energy returns and will only last a few years. More details in my previous posts.
And if crude production goes down, it will pull down total oil and gas production. Meanwhile, global oil and gas demand continues to rise.
"Why the Oil Industry is
"Why the Oil Industry is Running Into Major Trouble"
http://www.alternet.org/economy/why-oil-industry-running-major-trouble
ralfy wrote: Meanwhile,
ralfy
Fixed
ocelot wrote: ralfy
ocelot
Obviously, production has to rise to meet increasing demand. The problems:
- Crude oil production peaked in 2005, and expensive shale oil is now being used to meet increasing demand.
- Shale oil is expected to last for only a few years, and according to the IEA U.S. shale oil technology cannot be easily replicated elsewhere.
- Crude oil producers face increasing capital expenditures. As it is, production for the five major players has dropped by 25 pct since 2005.
- Shale oil producers also face similar problems. For example, just recently the EIA cut estimates of recoverable oil from Monterey by over 90 pct. Very likely reserves for U.S. shale oil are over-estimated.
Worse, producers face rising capital expenditures and lower energy returns. All of these were explained earlier.
- As for demand, it has to rise by 2 pct to maintain economic growth, the equivalent of one Saudi Arabia in new oil production every seven years. To deal with a growing global middle class, it has to be one Saudi Arabia every three years. Again, all of these were explained earlier.
http://www.theguardian.com/en
http://www.theguardian.com/environment/earth-insight/2014/jun/06/shale-oil-boom-over-energy-revolution-blackouts
One sentence in this article of particular relevance for this thread is 'While the fossil fuel empire is crumbling, the renewable energy sector has received 60% of total investment in power plants from 2000 to 2012' expanded on here
http://www.theguardian.com/environment/2014/jun/03/world-not-moving-fast-enough-on-renewable-energy-says-iea
"Commentary: Interview with
"Commentary: Interview with Steve Kopits"
http://www.resilience.org/stories/2013-04-30/commentary-interview-with-steve-kopits
Video lecture and PDF presentation:
"Global Oil Market Forecasting: Main Approaches & Key Drivers"
http://energypolicy.columbia.edu/events-calendar/global-oil-market-forecasting-main-approaches-key-drivers
There is an existentialist
There is an existentialist nihilist group who say dig it all up and use it and be done with it, destruction and depletion is an inevitable trait of the human survivalist methodology, why ration something which gives comfort, just as the neanderthal slaughtered 20 mammoth when they only needed 2, or how the fox instinctively killed all the hens in the hen-house when it only needed 1! These regulators are mostly resting on their privilege, they are the same who say that 2 billion chinese should not be allowed a car or TV, yet they themselves, as privileged neo-colonialists, pass judgement on how THEIR green agenda makes them overcome their own guilt complex!
factvalue wrote: But isn't..I
factvalue
None of this has anything to do with peak oil.
factvalue #87; pick any year
factvalue #87; pick any year in the last 40 and tell me when the same claims about impending shortages, impending permanent shortages have not been predicted by peak oilers? I've been following this for 40 years, and there hasn't been a single year that we didn't get such a prediction.
The peak oil advocates are a bit like a weatherman who, every day, predicts it will rain "soon." Sure thing. "Soon." And just because he was wrong for 40 years, doesn't mean he'll be wrong for 41 years right? Except if you're wandering in the desert for 40 years, with some clown predicting rain everyday, you might want to find an oasis and just stay there.
ralfy wrote: "Commentary:
ralfy
Baloney. That is precisely NOT what Hubbert argued. The peak oil argument is one, essentially, of entropy: that production follows a bell curve both upward and downward; once on the downward side, it cannot be reversed; that as cumulative production increases, which means depletion of reserves, the remaining oil cannot be accessed in sufficient quantities. Period. Hubbert doesn't claim this is a function of technology/cost. This is an absolute decline in returns that is immutable.
Peak oil is not about marginal returns on investment; marginal production.
S. Artesian
S. Artesian wrote:
It's been a while but weren't you keen on tight oil as a viable long term option? These seemed to make that look unlikely to me. I'm pretty on the fence on this issue. I like your weather analogy. Having been firmly in both camps in the past I think there seem to be too many variables for really accurate forecasting, although some people seem very entrenched.
And likely to remain so.
S. Artesian wrote: None of
S. Artesian
They have everything to do with peak oil, as shale oil is being used to make up for a lack of crude oil production.
S. Artesian wrote: factvalue
S. Artesian
To recap, in a 1976 television interview, Hubbert predicted that crude oil production would peak in 1995 + 10 years, or 2005.
In 2006, in a "Four Corners" documentary, the IEA argued that oil production issues have to do with politics. The same documentary revealed that two-thirds of oil-producing countries have reached or have gone past peak production, and that discoveries peaked in 1964.
In 2008, the IEA conducted a survey of oil fields worldwide (according to a radio interview).
In 2010, the IEA released a report confirming that crude oil production did peak in 2006.
Also, it was shown that for the top five players oil production dropped by 25 pct since 2005.
During the same year, it was shown that in terms of per capita, world oil production peaked back in 1979.
In January, it was shown using EIA data that global crude oil production remains in a 73.4 Mb/d plateau as of October 2013. The EIA also released its latest report, showing that U.S. shale oil will peak in 2020. The IEA also confirms that it will be very difficult to replicate what the U.S. did elsewhere.
Finally, one recent presentation shared here:
http://www.libcom.org/forums/thought/peak-oil?page=3#comment-540358
shows that capital expenditures have doubled in exchange for a marginal increase in oil production, which together with a tripling of oil prices, is a clear sign that crude oil production has taken place, and that the factors that led to it are also affecting unconventional production.
S. Artesian wrote: Baloney.
S. Artesian
I'm not adding evidence to show that Hubbert is right because recent crude oil production data already confirms that.
What this new information shows is the effect of peak oil: high capital expenditures.
The implication is that the effects of peak oil may take place even before oil production reaches a peak. Put simply, the market can barely tolerate high oil prices and producers are getting squeezed by higher costs.
That's all very interesting--
That's all very interesting-- until you ask someone to name the top 5 "oil players" in 2005. So let me ask, what were the type five oil players in 2005? How many were in OECD countries, the countries IEA just happens to represent; and the organization of which it happens to be part?
And what has happened with oil production outside the " 5 major players"? Well if you look at the OECD statistics for world production of oil through 2011 (last year analyzed in IEA's 2013 report), oil production has increased consistently, and pretty steadily, except for........2009 (see http://www.iea.org/publications/freepublications/publication/KeyWorld2013.pdf. And what was 2009? Oh, just the trough of the biggest economic contraction since the Great Depression.
In 1973 oil accounted for about 46% of the world's energy supplies-- or about 2.4 Mtoe; in 2011 oil accounted for 31% of supplies, or about 3.6 Mtoe.
Anybody see a peak there?
While crude oil production has basically been flat in OECD economies since 1980, it has expanded since the post 1980s trough by about 40% in the rest of the world.
So where's the peak?
And natural gas production? That's basically grown everywhere and output is now 3X the 1971 level.
Don't know where Ralfy gets "his" OECD data. Mine come from the 2013 Key World Statistics summary report.
I think S. Artesian is
I think S. Artesian is totally correct, and he's honest!
S. Artesian wrote: That's all
S. Artesian
"Total Production by the Top Five Oil Majors Has Fallen by a Quarter Since 2004"
http://www.theoildrum.com/node/9946
"World crude production 2013 without shale oil is back to 2005 levels"
http://crudeoilpeak.info/world-crude-production-2013-without-shale-oil-is-back-to-2005-levels
using data from the EIA.
Per capita peak in 1979:
http://cassandralegacy.blogspot.com/2013/07/peak-oil-what-peak-oil.html
using data from multiple sources (indicated in the graph).
Peaked in 2005. See the EIA data shared above. See also IEA World Outlook 2010 report:
http://www.worldenergyoutlook.org/publications/weo-2010/
Also,
"International Energy Agency says 'peak oil' has hit. Crisis averted?"
http://www.csmonitor.com/World/Global-Issues/2010/1111/International-Energy-Agency-says-peak-oil-has-hit.-Crisis-averted
That actually proves peak oil. Otherwise, why resort to natural gas if crude oil production can be ramped up easily?
In addition, the energy quantity and quality for natural gas is low, as shown in the chart in this article:
http://www.theoildrum.com/node/3786
See also the IEA 2010 report, which shows only a 9-pct increase for total oil and gas for the next two decades, but only as long as crude oil production does not drop. Worse, total production has to meet a demand that has to increase by 2 pct a year. More details in the report.
The sources of data can be found in the links I shared in this thread.
In addition, consider analysis of capital expenditures and prices. See the Kopits lecture shared earlier for details.
Early Release overview for
Early Release overview for AEO 2014:
http://www.eia.gov/forecasts/aeo/er/executive_summary.cfm
shows a peak for total liquid fuels for the U.S. soon.
Natural gas keeps rising but will be exported to other countries. This has to do with the phenomenon that capitalist economies in a global economy are ultimately coupled to each other, such that profits in one country can only be gained if spending in another countries rises. And that means overall increases in oil and gas consumption worldwide.
More details on expected global total oil and gas production and demand can be seen in the IEA report shared earlier. The gist is that demand has to keep rising at around 2 pct per annum to maintain economic growth, or the equivalent of one Saudi Arabia in new oil every seven years.
However, due to low energy returns for unconventional production plus the presence of a growing global middle class, the requirements might be higher: around one Saudi Arabia in new oil every three to four years.
Also, on the recent IEA report:
"US shale boom is over, energy revolution needed to avert blackouts"
http://www.theguardian.com/environment/earth-insight/2014/jun/06/shale-oil-boom-over-energy-revolution-blackouts
Finally, on the latest BP Statistical Review:
"Oil prices started to skyrocket when one quarter of global supplies went into irreversible decline"
http://crudeoilpeak.info/oil-prices-started-to-skyrocket-when-one-quarter-of-global-supplies-went-into-irreversible-decline
Ralfy is providing an easy
Ralfy is providing an easy target for S. Artesian by:
(a) Using incorrect terminology; and
(b) Not addressing valid points, but instead bringing up other ones.
In the process, Ralfy misses the opportunity to demonstrate the validity of the overall theory and also misses the opportunity to discuss the political consequences of this.
Let me see:
1.
Yes, this is an indication of the basic geological scarcity of oil, but it does not, in itself, amount to proof. OPEC countries, and many other Third World countries, attempt to reserve their oil deposits for themselves, as a "national patrimony". The declining production of the international oil companies is therefore an indication only. It should be used carefully and in conjunction with wider arguments about global capacity.
2. Perhaps the aspect of Ralfy's posts which irritates me the most is the constant statement that "crude oil peaked in 2005". S. Artesian and others refuse to accept that, because it is not correct. What peaked in 2005 was not crude oil, but conventional crude oil. S. Artesian's dismissal of the significance of the 2005 peak is incorrect, but by using incorrect terminology, Ralfy is missing the necessity to demonstrate why the peak in conventional crude is significant. I did this, in detail, in Post #49 on this thread (though I'll provide a brief conclusion at the end of the quote):
Summary conclusion: Unconventional oil will not provide a long term postponement of Peak Oil. Tight oil in the US is providing a short term boost to production, but the very high decline rates of the wells mean it won't last long. Other unconventional oil does not have the capacity for increasing oil production beyond what exists today, but will provide a cushion on the downward slope after the peak.
3. S. Artesian gives the example of Iraq, where production costs appear low, to counter Ralfy's argument about increasing production costs. Ralfy hasn't answered this argument.
The answer is that Iraq's productive capacity has been kept off the market artificially by one mean or another ever since Saddam Hussein invaded Kuwait in 1990. In recent years, the insurgency in Iraq by various Sunni Muslim forces has hampered attempts to bring Iraq's oil to market. Production has been increasing, but slowly and unevenly. Recent events, however, mean that production might drop again. In any event, we shouldn't expect all of Iraq's undoubtedly extensive unused production capacity to come onto the market any time soon.
The low costs in Iraq, therefore, are a special case and don't contradict the general argument about rising production costs. In the unlikely event that, in the near future, Iraq gets a government that is stable and has legitimacy in the eyes of both the population and the imperialist powers, there would be a fairly rapid increase in global oil production up to a level about 5 or 10 million barrels per day higher than now. Current trends, however, would then re-assert themselves.
The only thing that would prevent current trends re-asserting themselves would be if new Iraqs were to come along every 5 or 10 years for the indefinite future. And that would only be possible if I was incorrect about the potential of tight oil outside the US.
4. So now let's get onto politics. What does this mean for the struggle for the working class to make world revolution? I don't have enough time to do a full exposition, but I'll mention a couple of things:
(a) The Gulf monarchies are financed mainly by rent income from the oil deposits in the lands they rule. Direct extraction of surplus value from the working class is secondary. This has given the Gulf monarchies discretionary income with which to influence world events. It is well known that the Qatari monarchy has financed Al Jazeera, which is used to promote that ruling family's view on how the world should go (and which, also, by the way, has improved the standard of journalism in West Asia). What is less well known is the activity of the House of Saud, which probably tops the list of the world's most reactionary governments.
Peak Oil will increase the price of oil, but whether it will benefit an individual Gulf monarchy depends on whether production in its domain falls faster or slower than the global average. If Ghawar fails (and there are reasons for believing it could do so suddenly), "Saudi" Arabia's oil production would halve and exports would almost cease. This would produce massive political results, since the House of Saud would have to start relying primarily on surplus value extracted in the country and would no longer be able to buy off dissent by paying its subjects to accept its pre-feudal social relations.
(b) Increasing oil prices would increase the cost of living for the working class in advanced countries - but would not do so uniformly. Workers with long commuting distances and no access to public transport would be particularly severely affected.
(c) Road investment in recent years will be shown to be a massive white elephant. If done by the public sector, governments will find themselves being forced to face demand for public transport while still burdened with debts from the road building spree. If done by private capital, workers who have had their pension funds invested in them (as is the case in some countries, at least) will suffer. So say goodbye to thoughts of retirement.
OK. That's about enough for the moment. The Peak Oil theory is valid, but its advocates have predicted its imminence so often that sceptics get a case of "the boy who cried wolf". What we need to do is look at it in a non-catastrophic way and understand what it will do to the political landscape in the next decade or two.
Quote: "Total Production by
Those five "majors" are .......corporations. Are you going to tell me that when auto production declines for the top 5 auto companies, that's an indication of a shortage of.....automobiles? steel? aluminum? safety glass?
And what exactly does that prove.......given the severity of the economic contraction and the very slow recovery?
Per capita peak in 1979? Yeah, all that indicates is that companies, after the second oil price shock became, that much more efficient in their use of oil. Study the economy for crying out loud; what was the response to the second oil price shock, even after the double dip recession that ended in 1982. Look at how much less oil is now consumed per unit of industrial production; how much automobile mileages have improved; look at how efficiencies in air and rail fuel use have evolved since 1979.
Nonsense. Pure unadulterated nonsense. Natural gas production has increased for the same reason any production increases-- profitability. You don't seem to have the slightest bit of understanding of what drives capitalist production.
Quote: The answer is that
No, not "ever since"-- Iraqi oil production has increased to the point that for 2013 it was the second largest producer in the OPEC cartel, at over 3 million barrels a day. The restriction on Iraq's production after 1991 does not drive down the costs of production; it actually increases the costs of production as anyone involved in the industry can tell you. Reclaiming a shutdown oil field is much more expensive than continuing or increasing production from a functioning field.
Moreover, the contracts entered into were long-term contracts. I don't think the oil companies involved would project themselves into a long term loss. Production costs for increasing production from Iraq's fields to 5 mill boe/day are not expected to increase substantially-- that was the whole point of Iraq demanding, and winning, reduced payments over the life of the contracts.
Unconventional will not "postpone" peak oil? It already has, using Ralfy's claim that Hubbert predicted the peak at 1995 + or - 10 years. Right now we're at 1995 + 19 years.
Like I said, you can wander in the desert and predict it will rain every day for forty years, and eventually, you'll probably be right. But that abstraction has absolutely nothing to do with conditions in the desert and the need for water.
Ablokeimet wrote: Ralfy is
Ablokeimet
This refers to oil companies, not countries. The reason is rising capex. More details are given by Kopits.
Crude oil is conventional oil, together with condensates, etc.:
http://www.iea.org/aboutus/faqs/oil/
The peak in conventional production is significant for painfully obvious reasons. This was explained several times in previous messages.
According to the EIA, U.S. shale oil will peak in 2020, and the production peak level will not be high. In addition, the IEA argues that U.S. production cannot be replicated elsewhere. More details in my previous posts.
You do realize that Iraq is in turmoil right now and that the only way to get that oil is for the West to take control of the region?
According to Staniford,
"Iraq Could Delay Peak Oil a Decade"
http://www.theoildrum.com/node/6101
I don't think that's a lot, especially given a growing global middle class. And then there's
"The Peak Oil Crisis: Iraq on the Precipice"
http://oilprice.com/Energy/Energy-General/The-Peak-Oil-Crisis-Iraq-on-the-Precipice.html
Again, this does not counter my argument. If any, it makes the problem even more important.
Also, don't forget that the world market can barely tolerate high prices. So what happens when increasing capex meets prices that can barely increase. View Kopits' lecture for more details.
Again, this makes my argument even more important.
Also, oil is used for manufacturing and overseas transport, not just commuter transport. Even petrochemicals are used for thousands of products.
Again, this only supports my views.
First of all, it's not a theory but a fact. It's a theory only if it can be shown that crude oil production can be ramped up indefinitely. And the fact that we are now talking about tight oil strengthens my argument further.
Second, the political situation plus global warming amplifies the effects of peak oil.
Third, given the fact that the IEA and others are issuing warnings concerning this problem and the effects of global warming (especially given the point that some unconventional production may increase CO2 emissions), then we should look at this as a major concern.
S. Artesian
S. Artesian
The major driver is higher capex. More details in the Kopits lecture.
That even with a tripling of oil prices producers could not ramp up production.
Recall that capex doubled in exchange for a marginal increase in production. That's peak oil. More details in the Kopits lecture.
The reason why consumption per person hardly rose is because the global middle class remained fairly small. That is no longer the case. More details in my previous messages.
Natural gas has low energy returns. We are now using that and shale oil because returns for crude oil have gone down. More details in my previous posts, especially those that refer to EROI.
S. Artesian
S. Artesian
3 Mb/d. You do realize that to at least maintain global economic growth, world oil demand has to go up by that amount every two years?
As for unconventional production postponing peak oil, that doesn't disprove my argument. The fact that we are now resorting to the former shows that crude oil production has peaked.
Finally, according to the IEA, world oil and gas production can continue rising for two decades, but only if crude oil production does not drop.
On top of that, total production is expected to increase by only 9 pct, and that's assuming strong government policies and oil producers going for maximum depletion rates. Meanwhile, global demand has to rise by 1-2 pct every year just to meet economic growth, the equivalent of one Saudi Arabia in new oil every seven years.
And given a growing global middle class plus lower energy returns from unconventional production. We will need one Saudi Arabia every three to four years:
"Former BP geologist: peak oil is here and it will 'break economies'"
http://www.theguardian.com/environment/earth-insight/2013/dec/23/british-petroleum-geologist-peak-oil-break-economy-recession
Here are quotes from our BP
Here are quotes from our BP geologist that illustrate the complete confusion and disregard for their own arguments that "peakologists" utilize:
The good doctor says this:
And then follows it up with this:
Well first, if peak oil is not a result of declining reserves, but declining production rates, then why is the good doctor introducing this (specious) argument about reserves? Simple answer is that the peakologists always switch arguments when confronted with the uncomfortable evidence of capitalist production. Here it's production, but if production really isn't declining, then it's reserves. And if reserves aren't declining, then "it's new discoveries have not matched consumption since 1986"... as if new discoveries were a function of innate, original supplies, and not technology, and profit rates. New discoveries haven't kept pace, and yet oil production has increased steadily since the 1980s? What does that tell you? It tells me that existing fields + new discoveries, have been able to meet supplies every years since 1986.
The problem with peakologists is that they don't understand the economy, the capitalist economy of oil production.
Plus, our good doctor disagrees with Ralfy, as he thinks we entered the peak in 2008, not 2005, or maybe not, maybe we're just in the "foothills."
And for good measure, our peakologist good doctor trips all over himself with this gem:
So it's an economic argument after all.........it's all about price, cost, profit. So if the price goes to $150 barrel, the absolute geologically determined peak is moved out? That's not what Hubbert said. That's not what Hubbert argued.
Doesn't anybody recall the beginning to the run-up in oil prices? Doesn't anyone recall the decline of oil prices to below $10/barrel-- at or near the actual cost of production? Doesn't anyone call the frantic pleas to OPEC by oil companies to do something-- and OPEC's response in 1999? Doesn't anyone recall the tumbling of oil price again in 2002 due to the recession, and the pleas again by oil companies to do something about Iraq and it's "violation" of production quotas (complaints about Iraq had actually started in 1996 as its production was moving to the 3 million boe/day mark)? Doesn't anyone recall the big boost the Iraq war gave to oil prices and oil company profits-- culminating in the blowout of 2007, where the oil majors in the US accounted for something like 35% of all the profits garnered by the non-financial corporations in the S&P indexes?
Dealing with peakologists is engaging in a perpetual Groundhog Day discussion; every new day is the same day. Campbell, Deffeyes, Laherrerre were arguing back in the 1990s that this was the peak, or very close to the peak; and 2001 was DEFINITELY the peak, and the future looked like Mad Max, the Road Warrior. Well, things didn't actually work out that way. Now we wake up to a new day with new peakologists telling us the same-old, same-old, with the same confusion and ignorance as we heard yesterday.
S. Artesian wrote: Well
S. Artesian
He is not "introducing this (specious) argument" but seeing it as a questionable argument. Read the first quoted statement very carefully.
There was no switch of argument. Read the quoted statements very carefully. The first shows that peak oil refers to production rate. The second statement reinforces that point.
Actually, the two quoted statements are directly connected to "the capitalist economy of oil production," as a capitalist system requires increasing oil consumption.
That is not disagreement as the year given is only three years off. Disagreement can only take place if it is claimed that crude oil production did not peak at all.
Do you have evidence to show that, or at least a study that predicts that current crude oil production is merely in a temporary lapse?
That only moves the peak forward. In order to argue that peak oil is simply a matter of economics, you will have to prove that oil production will continue rising indefinitely as long as oil prices go up. That can only happen if oil is an infinite resource. Can you prove that?
More important, you will have to demonstrate that the global economy can easily afford oil at $150, or even more. Can you prove that as well?
Finally, Hubbert predicted that crude oil prediction would peak sometime in 1995 + 10 years. Isn't that what happened?
Oil price rose from $30 to $100, which gave oil companies a lot of incentive to find and sell more oil. That's why capital expenditures for 2005-2012 was twice that of 1998-2006. And yet they only managed to increase oil production marginally. You will find more details in Kopits' lecture.
Are you implying that this has nothing to do with peak oil? If so, please explain your reasons and give evidence.
Please point out which of my posts refers to Campbell and others, or that the future will look like something from Mad Max.
To recap, I referred to Hubbert, the IEA, and EIA. That is,
In 1976 Hubbert predicted that global crude oil production would peak in 1995 + 10 years.
In 2006, the IEA argued in a "Four Corners" documentary that crude oil production is not peaking, and that supply issues have to do with "above ground" problems.
In 2008, the IEA conducted a major survey of the world's oil fields. This was shared in a 2010 radio interview.
In 2010, using data collected, the IEA released a report, arguing that crude oil production peaked in 2006. The link to the report was given earlier.
EIA data until October 2013 confirms that crude oil production has been in a 73.4 Mb/d plateau since 2005. The link to that was also given earlier.
The latest EIA report states that U.S. shale oil will peak in 2020, and that natural gas will now have to make up for lack of total oil and gas production. A page about the report was shared earlier.
In addition, what Miller says is confirmed by Kopits. That is, capital expenditures for the oil industry doubled and yet production barely increased. A link to the lecture (video and PDF) and an interview were shared earlier.
Given these points, are you arguing that crude oil production hasn't peaked? Or that U.S. shale oil won't peak in a few years? Or that capital expenditures didn't double? Or that production actually increased significantly and yet was not revealed to the public? Or that the global economy can easily afford oil at $150 or even more?
Here's another article about
Here's another article about Iraqi oil:
"World’s untested assumption on 6 mb/d Iraqi oil by 2020"
http://crudeoilpeak.info/worlds-untested-assumption-on-6-mbd-iraqi-oil-by-2020
Again, note that this point makes the issue of peak oil more significant. That is, because oil production has reached or gone beyond peak for two-thirds of oil-producing countries, then powerful countries are now encouraged to attack or destabilize countries like Iraq and even Iran to control vital oil resources.
ralfy wrote: Quote: The
ralfy
I don't believe this is the case, it don't see why capitalism should require oil any more than it in the past required whale oil, certainly it will use oil so long as it is more profitable than the alternatives, but i don't see why it wouldn't just switch as soon as alternative sources of energy become cheaper/more practical
radicalgraffiti wrote: I
radicalgraffiti
I do not think the volume of goods and services in 1846 may be compared to what we have today.
As for a transition to other sources of energy, I discussed that in detail in previous posts.
I see Peak Oil's really
I see Peak Oil's really kicking in at the moment...
FT: Brent oil falls below $54 for first time in five years (paywalled)
FWIW: Quote: http://thewolfat
FWIW:
Or
Or this:
http://petroleumtruthreport.blogspot.co.uk/2015/01/the-oil-price-fall-explanation-in-two.html
http://blogs.reuters.com/grea
http://blogs.reuters.com/great-debate/2015/03/24/goldilocks-zone-for-oil-prices-is-gone-for-good/
Watch out for increased
Watch out for increased production in Iran, if this nuclear deal comes through, it will mean the eventual end of most sanctions. It's gonna open the floodgates, Iran needs the cash to badly to not sell, 30$ a barrel oil anyone?
ocelot wrote: I see Peak
ocelot
Peak oil doesn't refer to price but to production cost, both in terms of money and energy.
That's why while prices dropped production costs continued to rise (now at $50 to $90 a barrel). Because of this, the industry has had to renegotiate debts, lay off thousands of workers, and burn through its cash flows to stay afloat.
In the end, more will realize that peak oil is based on physics and not economics.
https://www.bloomberg.com/news/articles/2016-08-29/oil-discoveries-at-a-70-year-low-signal-a-supply-shortfall-ahead