An objection to Hubbert's U.S. production curve as a benchmark for world production

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Tigermoose's picture
Tigermoose
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An objection to Hubbert's U.S. production curve as a benchmark for world production

I have thought about Peak Oil for a while, trying to figure out if it is a reliable theory or not.  I think I have thought up a valid objection.  Here it is.

Hubbert's model for U.S. production that follows a bell curve only shows a decline because of market substitution.  Let me explain.  As the cost of other non-U. S. oil producers became lower than U. S. producers, the market naturally shifted consumption to the non-U. S. producers.  Thus, there is a decline in U. S. production as non-U.S. production is cheaper. This is the decline slope in the bell curve.

 

But I contend that this does not hold true for world production.  As world oil prices rise, demand will slacken (econ 101).  This in turn will reduce the price.  This will go back and forth until an "ideal" price is reached.  So instead of a decline, I see a plateau of oil production and consumption.  There is no sufficient substitute that consumers can go to instead of oil, so we will not have the steep downward curve of the Hubbert model.  And if we do come up with a better solution, then all so much the better. 

Whew.  So perhaps the fears of societal collapse are unfounded?  Perhaps instead we will see a decade or two of low to no-growth while the market stabilizes the price of oil and better substitutes are identified and consumption is lowered.

 

What do you think?  Is this a valid criticism of peak oil?  If others have argued this before, please send me some links!

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Damnthematrix
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sorry, but you are wrong.

Well, how about a list of 42 countries that have all peaked, complete with charts and data?

http://www.dieoff.org/42Countries/42Countries.htm

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In each case, consumers are substituting cheaper sources of oil

I am arguing that the massive bell curve decline in hubbert's model is a function of substitution of other cheaper sources of oil.  When we reach a situation when no cheap oil exists to be substituted, the price of oil will rise and the production curve will plateau rather than drop.  Again, the drop seen in Hubbert's model is a result of substition of cheaper oil finds in other parts of the world -- not necessarily that no oil exists in that country.  It's just that it is more expensive to locate and extract in that country than it is in other countries.

Now, when we hit a point where all the easy cheap stuff in the world has depleted to the point that the price of oil rises significantly, then production will plateau rather than drop as a function of the opposing forces of supply and demand.  There will not be a crash -- just a slowdown.  At this point, the higher price of oil will incentivize consumers to adopt alternative energy sources because these sources compete successfully with oil.   Once a sustainable infrastructure and alternative energy sources scale up the supply of alternative energies will reduce the demand for oil. 

 

So in summary, this would be a peak, a plateau, and then a gradual decline in the production of oil.

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Damnthematrix
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Tigermoose wrote: I am
Tigermoose wrote:

I am arguing that the massive bell curve decline in hubbert's model is a function of substitution of other cheaper sources of oil.

WHAT other sources?  How can the US substitute when every other country is depleting like crazy, Iraq being the only exception?  Did you even look at that URL I posted?  FORTY TWO oil producing countries all peaked out.......  just who do you think will sell you cheap oil now?

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look at what oil is used for . .. .

. . . .. . with all respect you really need to consider the amount of energy being used and for what. It is very hard to identify any physical object around modern day living that does not contain oil - anything plastic should give a hint. It is also worth considering how effective a store of energy oil really is, pushing a 10 ton truck down the motorway would take several hundred people. The Oil Drum had many posts on this: theoildrum.com

OK replace with what? Gas, biofuel, wind, . . . . . careful: do not underestimate how fast we are ripping through millions of years of a very very effective store of energy.

Gas is a neat store also but how much energy \ change to implement global change to gas to fuel transportation alone? Then what happens to peak gas?

Biofuels - forget it! Trust me on this - people will starve: thin (effectively) square metres covering on the earth which receives sunlight for a couple of months compared to cubic metres received for months (trees don't grow in months). No figures at hand but a couple of hectares to keep a tractor going for a couple of hours. It really isn't going to happen.

Wind - on demand? We could cover the UK with windmills and all would be fine if we have unlimited supplies of lithium for batteries (as an example).

Ask yourself why do some people 'against' nuclear admit that it is our only option? Even that has problems. Liquid fluoride thorium is about the best choice at the moment IMO but remember the Jevons paradox! If we solve the energy problem we will continue to consume more.

It is bad enough that humans are very naughty when it comes to waste, but when we continue to insist on growth we enter into the world of finite resources.I think Sir David Attenborough who joined the Optimum Population Trust stated the crux of the problem as: "I've never seen a problem that wouldn't be easier to solve with fewer people, or harder, and ultimately impossible, with more."

I'm casually sipping a beer here and that was produced by yeast cells - we all know what happens to those cells!

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You assume a steep decline in available oil

I think that you are assuming a steep decline in the amount of available oil due to your reliance on Hubbert's model.  Oil will be available, just more expensive.  This rise in price will slacken demand.  People will find ways to use less or use alternatives.   The general price of goods will probably rise to reflect the rising price of oil.  But this is not armageddon.  This is  just a slowdown of the world economies due to a plateau of high oil prices.  Oil will continue to be produced from "less easy" sites.  If you understand that the decline in Hubbert's model is because of substitution rather than "no more oil", you will understand that oil can still be found in the "post-peak" countries such as the U. S.  It will just be more expensive, and the ERoEI will be lower.  This will be reflected in a higher price and a general slow down in economies.  However, this high price point will give rise to alternative energy sources and alternatives for plastics, fertilizers, transportation, etc which could provid their own economic boom.

People will not overconsume if oil becomes expensive.  They will not be able to afford to.  They will adapt their communities, their habits, their food choices, etc.  But this is not armaggeddon. 

Again, my original point here is that Hubbert's model cannot be extended as a model for future oil production in the world.  Hubbert's model's steep decline is a result of substitution rather than "no more oil."  When you are dealing with the entire world as your system, there is no substitute producers of cheaper oil.  There is no other world to go to for cheaper oil.  Therefore, a steep decline will not take place and instead you will see a rise in price followed by a reduction in demand -- back and forth until a stable price point is achieved or until alternative technologies arise which disrupt and lower this price point.

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The oil will not be cheap - yes, I looked at your link

What I think happened with Hubbert's model is that the U. S. basically ran through all the cheap and easily discovered oil in the lower 48 states, and then producers of oil then moved on to oil fields in the middle east, the north sea, and the various other 42 countries you show. Producers hop from cheap source to cheap source in the world until all the cheap sources are depleted.  Then they have to raise prices as all the less cheap sources are tapped.  Keep in mind, though, that when the price of a good rises, demand will slacken and technologies and behaviors change as a result of that high price.  So all the projections that assume an exponential increase in demand are faulty as well. 

I never said oil will remain cheap.   It will rise significantly in price, and that will decrease demand, which will in turn lower price a little, which will in turn increase demand a little, back and forth until price optimization occurs.  This will remain stable until a disruptive technology or energy source reduces the demand for oil, which will in turn lower the price.  

I think it is fairly well established that more expensive options exist in vast quantities - tar sands, oil shale, deepwater, etc.  And because demand will slacken due to a higher price, these sources will last us for quite a while.  Over that long stretch of time, behavioral and technological changes will occur as a result of the higher price. 

This is not a crisis.  People and cultures will change gradually as a result of higher prices.

Remember:  the steep decline in the Hubbert model is a result of substitution, not total depletion.

 

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Tigermoose wrote:This is
Tigermoose wrote:

This is not a crisis.  People and cultures will change gradually as a result of higher prices.

 

I disagree that it will not be a crisis. I have no doubt that demand destruction will occur and will dampen price spkies. However, I believe the societal effects that will go along with a decreased demand will be horrific. Joblessness and poverty will be much worse than right now with over 44 million on food stamps. How will an increased demand on government services be handled with a decreased tax base?

Please explain how you feel destroyed demand will not be catastrophic for the "American way of life". People want to be comfortable and I see an abundance of discomfort on the way.

Other than Cuba's recent change, can you provide an example of a dramatic societal decrease in living standards that has occurred without significant turmoil (crisis)?

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On what basis do you think this will be a crisis?

If you believe this will be a crisis based on Hubbert's model, then that turns out to be inaccurate if Hubbert's model does not apply to what will happen in a world production system.  You might want to rethink your assumptions about a crisis and why you came to believe that.  If i'm wrong about the steep decline in Hubbert's model being a result of substitution rather than no actual oil remaining in the U. S., then I stand corrected.

Gradual change can be adapted to easily by people.  I do not think gradual change can be considered dramatic, but rather the normal course of history.  Therefore, I do not see why I would need to provide an example of a dramatic societal decrease in living standards that has occurred without significant turmoil.  I do not foresee a dramatic societal decreese in living standards, nor do I foresee significant turmoil due to peak oil.

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OK . . . . .

I appreciate that you are talking about steep decline v replacement. AYK the sweet stuff has pretty much gone already. I believe we have built a system over the last hundred years based on the easily refined oil. I'm thinking that is going to take a long time, a large amount of energy and a replacement technology to unwind \ convert those years. Basically I believe that our 'leaders' have too many vested interests and along with the hijack of governments by business with their own vested interest (read blindness) 'we' will leave it until it is too late purely because the Governments do not understand the scale of the problem (the companies say all is fine we can just frac this stuff to meet demands). A similar fiasco has just happened with the credit crunch: subprime reached a point where Wall street wanted more sub-prime because they can of course be shorted and that generates profits :(

Tar sands is the reason why I use the above argument, it is proof that business is blind and therefore our 'leaders'.

Ironically your argument (cost and technology) may prove better if there were a steep decline: people would be spooked into action. At the moment we seem to have oil companies proclaiming that we have oil galore. This could well lead to obscene price levels but if this happens little by little we end up in the boiled frog situation (I now hate using that phrase but it works). Prices go up and up and up so people try to cut back but oil affects all prices (food, clothes, . . . ) courtesy of the fact that we transport globally now. There are many more variables in the equation such as shrimps in the North Sea near UK are transported to China to be shelled and then transported back to UK, . . . . etc , etc. A good example that people may be able to relate to: Here in the UK we are currently paying £1.30 per litre for petrol (gasoline) that equates to approx $9 a gallon - what are you people in USA currently paying? $4??

How would a doubling of fuel prices hit the US? Something like 80% of your beef is handled by just over a dozen slaughter houses apparently but it could be packaging companies, doesn't matter, round trip costs?

I enjoy the debate, I wish you more luck with your outcomes than mine ;)

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Damnthematrix
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Tigermoose wrote: If you
Tigermoose wrote:

If you believe this will be a crisis based on Hubbert's model, then that turns out to be inaccurate if Hubbert's model does not apply to what will happen in a world production system.

How can you say demand destruction will cause less oil to be used is NOT proof the Hubbert model works?  The ratcheting down of demans as prices go up then down then back up is EXACTLY what the peakists have been saying the Hubbert curve would cause.  I've been following this for over ten years and I know what has been discussed!

Tigermoose wrote:

You might want to rethink your assumptions about a crisis and why you came to believe that.  If i'm wrong about the steep decline in Hubbert's model being a result of substitution rather than no actual oil remaining in the U. S., then I stand corrected.

You keep talking of substitution, but you haven't come up with what you will substitute....  you DO realise that unconventional oil like tar sands etc is ALREADY counted in the production curves......?

Tigermoose wrote:

Gradual change can be adapted to easily by people.  I do not think gradual change can be considered dramatic, but rather the normal course of history.  Therefore, I do not see why I would need to provide an example of a dramatic societal decrease in living standards that has occurred without significant turmoil.  I do not foresee a dramatic societal decreese in living standards, nor do I foresee significant turmoil due to peak oil.

Well......  if there are fuel shortages/rationing, and or you can't afford to fill the SUV to go to work, I think you have a crisis on your hands.

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logBurner wrote: shrimps in
logBurner wrote:

shrimps in the North Sea near UK are transported to China to be shelled and then transported back to UK, . . . .

Is that for REAL...??   It's unbelievable.....

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