When will we run out of oil? Never!

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When will we run out of oil? Never!

Chapter 11 from Julian's Simon's book, The Ultimate Resource II

The best rebuttal of Peak Oil that I have seen so far. Goof food for thought

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Re: WHEN WILL WE RUN OUT OF OIL? NEVER!

Sorry, I skimed over the chapter and didn't find it to be terribly compelling.  The author needs to listen to the Crash Course and learn about ERoEI (Net Energy) and the pitfalls of alternatives like ethanol, solar, and nuclear.  We might not ever run out of oil, but the stuff left in the ground might not be worth the trouble and expense related to extracting it.

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Re: WHEN WILL WE RUN OUT OF OIL? NEVER!

This was apparently written in 1998.

It seems to me that–10 years later–it has been superceded by reality.

Arthur

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Re: WHEN WILL WE RUN OUT OF OIL? NEVER!

 >The author needs to listen to the Crash Course and learn about ERoEI (Net Energy)

 The author is dead, so he won't be listening to anything Smile. He does discuss the laws of diminishing returns. I have not read the whole book in depth, but the author seems to be reasonable and thorough. It is certainly worthwhile to give the opposing view a chance

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Re: WHEN WILL WE RUN OUT OF OIL? NEVER!

I think that a lot of Peak Oil and/or Climate Change (CC) naysayers somewhat miss the point. Besides the ERoEI or if CC isn't human related, the issues we must seriously consider are that with each and every new oil field and the products they create are realeasing pollutants into our atmosphere, our water and our soil. Not to mention the biodiversity and natural habitat are rapidly declining as direct and indirect results.

Empty parking lots and highways are not exactly ideal places to grow or find food.

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Re: WHEN WILL WE RUN OUT OF OIL? NEVER!
rufus wrote:

I have not read the whole book in depth, but the author seems to be reasonable and thorough. It is certainly worthwhile to give the opposing view a chance

Please respect the other people on this forum by knowing what you are talking about before posting something which is contrary to the very purpose of this website.  Is there room for disagreement?  Of course.  But "do your homework" first and stop waisting other people's time.  At least look over the Blog Roll & Affliates and research your questions there before making such brash statements.

This is a serious topic.  Literally billions of lives are in the balance.  I am sure you are well meaning in offering up something you discovered and find interesting, but try to gather more information and filter it through your grey matter before proclaiming it to the world.

 

 

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Re: WHEN WILL WE RUN OUT OF OIL? NEVER!
rufus wrote:

 I have not read the whole book in depth, but the author seems to be reasonable and thorough. It is certainly worthwhile to give the opposing view a chance

Ah hem.  

I couldn't agree more that it's worthwhile to give the opposing view a chance.  But what makes you think we haven't?  Some of us have been studying this issue for a long time.  Years, in fact.  You glance through a book without even reading it, and then create a forum topic in ALL CAPS with the title "When will we run out of oil?  Never!"

As another commenter observed, that is irresponsible and disrespectful to those who have actually invested the necessary time and energy to learn about peak oil; not because you present a different view, but because you didn't even read the book, take any time to substantiate its arguments, or compare those arguments with opposing perspectives that are well-represented here and elsewhere.

All of this makes me wonder about your intentions.  Do you truly want to learn about PO, or are you just interested in stirring the pot.  If the latter, please don't waste our time.  That kind of thing has been happening more frequently around here lately, and it's getting tiring.

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Re: WHEN WILL WE RUN OUT OF OIL? NEVER!

Woah thats a bit harsh isnt it Pandabonium and Chris K?

Whatever happened to freedom guys? of both speech and information? Some of us havent been studying this for a long time. Your not really passing the dinner party test here gentlemen. If you cant bring up a topic you are interested in in order to have a discussion about it for fear of the 'experts' jumping on you then we, are, all, doomed.

And as for peak oil, havent we just pushed it way into the future by building and popping the mother of all bubbles thereby destroying credit, money, industry and growth for the forseeable future, perhaps forever? All we need to do then is jack the price of oil right up again once everyone has no money and presto, maybe the original poster was right, genius. Just like Bush who planned all this from the start, such vision.

Just my 1.334 UK pence anyway

peace love and intelligent friendly conversations to you all this festive season

barrt

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Re: WHEN WILL WE RUN OUT OF OIL? NEVER!

 Rufus,

I agree that we will never run out of oil, the only exception being that alternative sources of energy were found that could be used to extract it(oil) to the last drop, and it(oil) were perfectly non-fungible; that is to say, only oil could be used for some product or process that was essential to humankind's survival.

Thus, I have a question for those who have spent some time studying this issue; I guess I am asking: What are the best resources/studies/experts you have ran across that address or "get near" the following simplified situation ? (I'm talking average overall EROEI for all production.)

Thanks.

 

 

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Re: WHEN WILL WE RUN OUT OF OIL? NEVER!
jkibbe wrote:

Sorry, I skimed over the chapter and didn't find it to be terribly compelling.  The author needs to listen to the Crash Course and learn about ERoEI (Net Energy) and the pitfalls of alternatives like ethanol, solar, and nuclear.  We might not ever run out of oil, but the stuff left in the ground might not be worth the trouble and expense related to extracting it.

I found that there is compelling evidence that every argument he makes has to be re-examined carefully as he is so wrong at a basic level.

[quote=]

(6) For the very long run, there is nothing meaningfully

"finite" about our world that inevitably will cause energy, or even oil in particular, to grow more scarce and costly. Theoretically, the cost of energy could go either up or down in the very long run. But the trends point to a lower cost.

 

 

(7) Forecasts based on technical analyses are less persuasive than historical extrapolations of cost trends.

World not meaningfully "finite".??..... Once you have based your argument on such a premise, everything thereafter collapses if your premise is found to be wrong.

Anyone care to argue that the world has infinite oil resources ?

 

 

Cheers Hamish

 

 

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Re: WHEN WILL WE RUN OUT OF OIL? NEVER!

I think the basic point in the book is that we don't have to worry about running out of affordable energy in any meaningful time frame, because even if conventional oil gets more expensive, we have alternative energies to pick up the slack such as oil shale, tar sands, nuclear, solar, and bio-fuels. This is similar to John Holdren's view as you can see here: http://www.mitpressjournals.org/doi/abs/10.1162/itgg.2006.1.2.3?journalC...

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Re: WHEN WILL WE RUN OUT OF OIL? NEVER!
rufus wrote:

I think the basic point in the book is that we don't have to worry about running out of affordable energy in any meaningful time frame, because even if conventional oil gets more expensive, we have alternative energies to pick up the slack such as oil shale, tar sands, nuclear, solar, and bio-fuels. This is similar to John Holdren's view as you can see here: http://www.mitpressjournals.org/doi/abs/10.1162/itgg.2006.1.2.3?journalC...

Rufus,

This clearly illustrates how ridiculously uninformed the author of that book is.

No one - absolutely no one - who is seriously studying this issue suggests that alternatives such as those you mention (or any others) come anywhere near replacing the energy we get from oil.  Period.

Obviously there is a possibility this will change in the future, but not anytime within the next two decades unless some unforeseen miracle occurs.  Most analysts agree with the Hirsch report which stated that a minimum of two decades of serious mitigation efforts prior to peak oil would be required to avoid a global energy shortage.  As peak is nearly here or has happened already, and no significant mitigation efforts have begun, it is extremely likely that energy demand will outpace energy supply in the near future.

We produce the equivalent equivalent of about one cubic mile of oil each year.  We would need to have each of the following renewable sources running for fifty years in order to replace just one year of oil:

 

Put another way, to produce the equivalent amount of the energy provided by oil in one year would take:

  • 200 Three Gorges Dams
  • 2,600 nuclear power plants
  • 5,200 coal fired plants
  • 1,642,500 wind turbines
  • 4,562,500,000 solar panels

There are huge problems with scaling up each and all of these technologies to anything close to the levels above in a short period of time.  In some cases (as in the Three Gorges Dams), it is simply impossible due to geological constraints.  In others we are limited by economic, environmental and political realities.

The transition to renewable energy has barely begun.  As you can see from the graph below, today solar volatic energy accounts for just 0.04% of energy consumed.  Nuclear is 6%, biomass is 4%, hydroelectric is 3%, solar heat is 0.5% and wind is 0.3%.

 

Here's another breakdown:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I could go on but I'll stop here.  If you are seriously interested in learning more, I'd suggest the following resources for a start:

Dr. Mills' page on peak oil

The Oil Drum

Life After the Oil Crash

These are all free and immediately accessible.  When you're finished here you can read the following books:

The Party's Over, by Richard Heinberg

Twighlight in the Desert, by Matt Simmons

The Long Descent, by John Michael Greer

The Long Emergency, by James Howard Kunstler

Please do take the time to educate yourself on the issue before making bold claims such as "When will we run out of oil?  Never!"

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Re: WHEN WILL WE RUN OUT OF OIL? NEVER!
barrt wrote:

Woah thats a bit harsh isnt it Pandabonium and Chris K?

Whatever happened to freedom guys? of both speech and information? Some of us havent been studying this for a long time. Your not really passing the dinner party test here gentlemen. If you cant bring up a topic you are interested in in order to have a discussion about it for fear of the 'experts' jumping on you then we, are, all, doomed.

And as for peak oil, havent we just pushed it way into the future by building and popping the mother of all bubbles thereby destroying credit, money, industry and growth for the forseeable future, perhaps forever? All we need to do then is jack the price of oil right up again once everyone has no money and presto, maybe the original poster was right, genius. Just like Bush who planned all this from the start, such vision.

Just my 1.334 UK pence anyway

peace love and intelligent friendly conversations to you all this festive season

barrt

Bart,

I don't think I was out of line.  The purpose of this forum is to stimulate an informed discussion on the issues.  One of my assumptions is that people who come here are genuinely interested in learning and willing to educate themselves.  I am more than happy to share what I have learned if that is the case.

However, I seriously question the motives of someone who shows up on the forum and makes a post in all caps with the provocative title "When will we run out of oil? Never!" when that person by his/her own admission has just barely skimmed one book on the subject - and a book by an author with no established credibility on the issue at hand (Mr. Simon is a professor of business adminisatration at the University of Maryland).

If such a person came to my house for dinner and started shouting (the equivalent of all caps) bold claims that were so clearly uninformed, I would respond in exactly the same way I've responded here.  I would suggest to the guest that there is actually a large body of scholarship on the subject that he may want to avail himself of before making such claims.

Time is short.  As I said earlier, I'm very happy to share what I've learned and point people towards helpful resources when they are truly interested in educating themselves.  But sometimes people make posts that I think are more designed to "stir things up" than they are to stimulate a real discussion.  I think that is a waste of everyone's time.

If that isn't Rufus's intention, then I hope he takes the time to look through the links I provided and I look forward to an informed discussion with him in the future.

 

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Re: WHEN WILL WE RUN OUT OF OIL? NEVER!

Chris,

 Thanks for the information. Let me just say that the bold heading was a mistake. I merely copy and pasted the title of the chapter of the book I linked to, which happened to be in bold. if I were allowed to edit the post I would change that. I did not mean to shout. I happen to be a paying subscriber of Chris's report, so I am no troll. I hope that clears things up. Anyhow, I hope we can get past this and return to the substance.

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Re: WHEN WILL WE RUN OUT OF OIL? NEVER!
Chris Kresser wrote:

No one - absolutely no one - who is seriously studying this issue suggests that alternatives such as those you mention (or any others) come anywhere near replacing the energy we get from oil.  Period.

Chris, as I linked to in my post, John Holdren  who Obama appointed recently as Assistant to the President for Science and Technology, Director of the White House Office of Science and Technology Policy, and Co-Chair of the President’s Council of Advisors on Science and Technology, pretty much does hold exactly that. I will quote directly from the paper i linked to:

Quote:

But energy resources of other types are immensely larger and capable in principle of being expanded to multiples of today's use rates of oil and gas combined: there is 5 to 10 times as much coal as conventional oil and gas; there is 5 - 10 times as much oil shale and unconventional gas as coal; the energy potential of uranium and thorium resources is larger still; and harnessing even a small percentage of solar energy flow reaching Earth's land surface could meet multiples of today's world energy demand

read the rest here: http://www.mitpressjournals.org/doi/abs/10.1162/itgg.2006.1.2.3?journalC...

I will check out the information that you recommended. thanks

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Re: WHEN WILL WE RUN OUT OF OIL? NEVER!

I think it is clear that energy resources will become more scarce, and more expensive, with time.

But I also believe that the response to rufus' post was a bit too strong.

Pandabonium wrote:

Please respect the other people on this forum by knowing what you are talking about before posting something which is contrary to the very purpose of this website. 

Chris Kresser wrote:

[It] is irresponsible and disrespectful...because you didn't even read the book, take any time to substantiate its arguments, or compare those arguments with opposing perspectives that are well-represented here and elsewhere. 

Chris Kresser wrote:

This clearly illustrates how ridiculously uninformed the author of that book is.

"Contrary to the very purpose of this website?"  "Irresponsible and disrespectful?"  Good grief!

Is it contrary to the very purpose of this website for a brand-new member to offer ill-informed but well-meaning criticism in the hopes of receiving an educated reply?  I certainly hope not.  Is it disrespectful to challenge the beliefs of those who post here regularly unless all of your ducks are perfectly in a row?  Why don't we then demand the same level of articulacy of those who agree with us?

Rufus didn't so much as vouch for the accuracy of the book.  He only said that it was "food for thought."

Was the title of this forum irritatingly loud?  Sure it was.  Is it unreasonable to expect others to go and read an entire chapter of a book?  Well, possibly.  But you could just as easily have responded as follows:

"Rufus, unfortunately I don't really have time to read a whole chapter unless you are prepared to offer some specific points which the author makes, and how he intends to prove them.  I eagerly look foreward to a more detailed post from you so that I may respond in similar detail."

But to call the guy names?  Like "irresponsible" and "disrespectful"?   And for what reason?

Quote:

a book by an author with no established credibility on the issue at hand (Mr. Simon is a professor of business adminisatration at the University of Maryland). 

How much established academic credibility does Dr. Martenson have on the subjects of the Crash Course?  About the same amount, I might observe.  But we listen to him on the basis of the factual strength of his arguments, not by inferrence from authority.  Inferrence from authority is one of the most infortunate tendencies in science, and it is frequently the downfall of those who use it.

Rufus is a new member!  It would be a shame indeed if we suceeded in shouting him right off the site rather than educating him.

 

"If you can''t answer a man's argument, all is not lost; you can still call him vile names" - Elbert Hubbard

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Re: WHEN WILL WE RUN OUT OF OIL? NEVER!
rufus wrote:

>The author needs to listen to the Crash Course and learn about ERoEI (Net Energy)

The author is dead, so he won't be listening to anything Smile. He does discuss the laws of diminishing returns. I have not read the whole book in depth, but the author seems to be reasonable and thorough. It is certainly worthwhile to give the opposing view a chance

HAH!  Julian Simon was a total fool.  There is no opposing view, just daydreaming....

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Re: When will we run out of oil? Never!

In fact it is entirely correct we will NEVER run out of oil.  Fully 1/2 to 1/3 of what is left is simply not recoverable....

 

Mike. 

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Re: When will we run out of oil? Never!

Well, no doubt the second-to-last barrel of oil could be recovered, just at a net energy cost many times higher than the total energy returned.

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Re: When will we run out of oil? Never!

Damnthematrix makes a good point with the graph.  Question is where do you put the vertical dashed line?  If the oil is to be used as an energy source, it makes sense that the energy recovered must exceed the energy to recover.  But, if the oil is not burned, the situation is different.  Diamonds are a form of carbon and they burn.  They are used for abrasives, not fuel.  Oil makes some really neat polymers and lubricants.  I can see where oil would be put to use for durable goods and specialty items.  It's use as an industrial fuel will probably end in our lifetime.  The same could be said about whale oil.  Whale products continued long after its use as lamp fuel.  Before oil, wood was an industrial fuel, also.  In some applications it was prefered to coal.

Unfounded faith in the market seems to be the roadblock to getting past the end of the oil age.  Many people are willing to accept that oil in useable quantities will run out, but their faith in the market to conjure up the next fuel source keeps them from seeing the real energy issues.  If the average American eats the equivalent of 400 gallons of oil in food every year, that tells you that about 13 1/2 days of human labor equivalent feeds that American for one day.  Before mechanized agriculture, a farmer produced about 110% of his caloric needs.  Thus it took ten farmers to produce for one other person.  It's easy to see how so few modern famers can feed so many.  It also tells you in rough terms just how the complexity of our modern society will suffer when the agricultural oil subsidy diminishes.  The fraction of people producing food will have to increase dramatically if we expect to stave off starvation.  About 4% of the population produces all food and fiber.  Imagine the labor pool left over for other pursuits if that fraction were to return to its historical norm of about 90%.

Of course, this won't happen overnight.  It will take some years before hydrocarbon traction is abandoned.  The increasing demand for arable land for the projected increases in population and possible draft animals will probably put a squeeze on biomass as fuel.  If horses do make a comeback, there will have to be a 33% increase in agricultural production to keep them fed.  One might envision a massive network of electrified rail transport in various gauges and weight classes to transport passengers, long-haul freight, and short-haul agricultural commodities.  Inland waterways will be refurbished and new canals dug.  One might hope that enough people will be kept sufficiently busy so as to avoid such dissipations as warfare, investment swindles, and political corruption.

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Re: WHEN WILL WE RUN OUT OF OIL? NEVER!
jrf29 wrote:

I think it is clear that energy resources will become more scarce, and more expensive, with time.

But I also believe that the response to rufus' post was a bit too strong.

Pandabonium wrote:

Please respect the other people on this forum by knowing what you are talking about before posting something which is contrary to the very purpose of this website. 

Chris Kresser wrote:

[It] is irresponsible and disrespectful...because you didn't even read the book, take any time to substantiate its arguments, or compare those arguments with opposing perspectives that are well-represented here and elsewhere. 

Chris Kresser wrote:

This clearly illustrates how ridiculously uninformed the author of that book is.

"Contrary to the very purpose of this website?"  "Irresponsible and disrespectful?"  Good grief!

Is it contrary to the very purpose of this website for a brand-new member to offer ill-informed but well-meaning criticism in the hopes of receiving an educated reply?  I certainly hope not.  Is it disrespectful to challenge the beliefs of those who post here regularly unless all of your ducks are perfectly in a row?  Why don't we then demand the same level of articulacy of those who agree with us?

Rufus didn't so much as vouch for the accuracy of the book.  He only said that it was "food for thought."

Was the title of this forum irritatingly loud?  Sure it was.  Is it unreasonable to expect others to go and read an entire chapter of a book?  Well, possibly.  But you could just as easily have responded as follows:

"Rufus, unfortunately I don't really have time to read a whole chapter unless you are prepared to offer some specific points which the author makes, and how he intends to prove them.  I eagerly look foreward to a more detailed post from you so that I may respond in similar detail."

But to call the guy names?  Like "irresponsible" and "disrespectful"?   And for what reason?

Quote:

a book by an author with no established credibility on the issue at hand (Mr. Simon is a professor of business adminisatration at the University of Maryland). 

How much established academic credibility does Dr. Martenson have on the subjects of the Crash Course?  About the same amount, I might observe.  But we listen to him on the basis of the factual strength of his arguments, not by inferrence from authority.  Inferrence from authority is one of the most infortunate tendencies in science, and it is frequently the downfall of those who use it.

Rufus is a new member!  It would be a shame indeed if we suceeded in shouting him right off the site rather than educating him.

 

"If you can''t answer a man's argument, all is not lost; you can still call him vile names" - Elbert Hubbard

Irresopnsible and disrespectful may have been too strong.  I certainly want to create a welcoming environment for discussion here for everyone, no matter how informed or uninformed they are about these issues.

I already explained why I reacted the way I did, but let me clarify it further.  Imagine this scenario.  A group of people have been meeting for many years to discuss peak oil, climate change and economic instability.  A new member shows up at the meeting, stands up and shouts that oil is never going to run out.  When asked why he believes such a thing, he points to a book written by a professor in business administration that has no credibility whatsoever in the fields he is writing about.  What's more, he has not even read this book closely, nor has he read anything else of significance about the subject.

If this were to happen in the physical world, I would say it is disrespectful to the members of the group.  Not because the new member is disagreeing with the group, but because he hasn't taken the time to educate and inform himself on the issues before making such a bold claim.

Regarding the question of expertise: yes, Chris may not have specific educational qualifications in these areas we're studying (and for that matter neither do I), but the people he relies on for information most certainly do.  That's what I was talking about.  I've read Julian Simon and don't find his ideas to be compelling or supported by the weight of evidence, and he has no training in geology or energy science.

In any event, I'm over it and Rufus has explained that he's a paying member of the site and truly interested in learning about this stuff.  That's enough for me.  Let's move on.

 

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Re: When will we run out of oil? Never!
Chris Kresser wrote:

That's enough for me. Let's move on.

Surely.

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Re: When will we run out of oil? Never!
Quote:

I've read Julian Simon and don't find his ideas to be compelling or
supported by the weight of evidence, and he has no training in geology
or energy science.

Chris,

I think economics is an important part of the debate, not only geology. Here's why I think so. The important thing is the price of oil not the substance itself. A geologist may know a lot about the substance of oil, but not necessarily understand how markets allocate it. It reminds me of the time Julian Simon made a wager for 10,000 dollars with Paul Ehrlich, John Holdren, and John Harte that the price of raw material in the future would be cheaper not more expensive. Simon won that wager and they had to pay up. Read about it in wired magazine. It's an interesting article. I'd like to point out that oil at the current price, adjusted for inflation (using shadowstats.com) is cheaper than it was in 1985. That's a good thing and we should recognize it.

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Re: When will we run out of oil? Never!
rufus wrote:
Quote:

I've read Julian Simon and don't find his ideas to be compelling or
supported by the weight of evidence, and he has no training in geology
or energy science.

Chris,

I think economics is an important part of the debate, not only geology. Here's why I think so. The important thing is the price of oil not the substance itself. A geologist may know a lot about the substance of oil, but not necessarily understand how markets allocate it. It reminds me of the time Julian Simon made a wager for 10,000 dollars with Paul Ehrlich, John Holdren, and John Harte that the price of raw material in the future would be cheaper not more expensive. Simon won that wager and they had to pay up. Read about it in wired magazine. It's an interesting article. I'd like to point out that oil at the current price, adjusted for inflation (using shadowstats.com) is cheaper than it was in 1985. That's a good thing and we should recognize it.

I don't deny that understanding economics is important.  In fact, it's crucial as I pointed out in my comments about the EROEI of alternative energy sources relative to oil.  Matt Simmons is an energy analyst who understands the interplay of oil and the economy as well as anyone.  Richard Hirsch fits that bill too.  And they are both saying essentially the same thing: that we have peaked or are near peaking, and the consequences are unavoidable without two decades worth of mitigation efforts that have not yet begun.

Simmons, Hirsch and others all predicted short-term price fluctuations during the plateau/peak period.  The low price of oil now doesn't suggest that the price will remain low, nor does it suggest that oil hasn't peaked or won't peak soon.  In fact, some argue that the lower price of oil could actually hasten peak because at <$40/barrel nonconventional oil sources and exploration and development of new crude oil sources is no longer viable.  What's more, when oil is priced this low it completely torpedoes investment in renewable technology and infrastructure because renewables can't come close to competing with the EROEI of oil at that price.  So I have to disagree that this low price of oil is "a good thing".

Remember that peak oil has nothing to do with how much oil is still in the ground.  It is all about flow rates.  With the economic crisis we're experiencing and a deteriorating oil rig infrastructure that would require about $2 trillion in investment to update, it's quite possible that we've already passed the peak production of oil.

Simmons and others have suggested that oil demand has not plunged over the past few months as commonly believed.  Watch this Fortune interview:

 

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Re: When will we run out of oil? Never!
rufus wrote:

Chris,

I think economics is an important part of the debate, not only geology. Here's why I think so. The important thing is the price of oil not the substance itself.

Are you KIDDING ME?  Are you an economist?  Because if I had my way, I'd have most economists lined up against a brick wall and shot at dawn.....  just look at the mess they've got us into?  It's BECAUSE economists do not understand geology or the importance of energy, its quality, its density, its availability, its portability, its WORTH even, that for decades, whilst it was so easily available it was sold waaaaay too cheap.  Oil, history will recall, was the most important and most valuable resource we ever wasted..  WASTED, got that?  Wasted on monster cars, wars,  population explosion, inappropriate agricultural practices, flying around the world for trivial holiday pursuits, the list is very long.....

There are NO substitutes for oil, and thanks to economics, the Party's over, and our children face very difficult times adjusting to economists' total mismanagement of energy resources. 

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Damnthematrix
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Joined: Aug 10 2008
Posts: 3998
Re: When will we run out of oil? Never!
rufus wrote:

I think economics is an important part of the debate, not only geology. Here's why I think so. The important thing is the price of oil not the substance itself. A geologist may know a lot about the substance of oil, but not necessarily understand how markets allocate it. It reminds me of the time Julian Simon made a wager for 10,000 dollars with Paul Ehrlich, John Holdren, and John Harte that the price of raw material in the future would be cheaper not more expensive. Simon won that wager and they had to pay up. Read about it in wired magazine. It's an interesting article. I'd like to point out that oil at the current price, adjusted for inflation (using shadowstats.com) is cheaper than it was in 1985. That's a good thing and we should recognize it.

Ehrlich lost the bet because he erred with the timeline.  Steel and concrete and fuel doubed in price just while I was building my house between 2003 and today.....

I think oil being this cheap is REALLY REALLY bad....  things could not in fact get any worse!  Oil will continue to be totally squandered, but it will not last .  Because with oil this cheap there is not enough dough kicking around to extract the GEOLOGICALLY difficult oil, and so I predict that next year there will be queues at the gas pumps.  The ONLY solution will be for oil to return to $120+, but already precious time is being wasted....  most of the drilling rigs need replacing because they're all rusting away BECAUSE oil companies could not invest in replacements with oil at $20/30/40/50.  Now we need much more hi-tech and much more expensive gear to extract the GEOLOGICALLY difficult oil, and we're all going broke and going backwards.

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Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: When will we run out of oil? Never!

ODAC Newsletter - 19 December 2008

Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion
Analysis Centre, the UK registered charity dedicated to raising
awareness of peak oil.

Peak oil inched closer to official recognition this week as the
International Energy Agency’s chief economist Fatih Birol conceded that
conventional oil will peak by 2020.
This is somewhat more explicit and pessimistic than the IEA’s recently
published World Energy Outlook 2008. With luck his opinion will provoke
some free and frank discussion when Britain’s Energy Secretary Ed
Miliband hosts a summit with OPEC oil ministers in London today.

On the markets, even news of a record OPEC production cut
of 2.2 million barrels per day failed to stop the oil price hitting a 4
year low of $36/barrel, with attention focussed on collapsing demand in
the US and China,
and with the usual scepticism about the cartel’s ability to make any
agreement stick.  Such low prices set the market up for another spike
as soon as growth returns.

The depth of the economic crisis
was underscored as the Fed slashed interest rates almost to zero,
meaning it has all but exhausted the conventional ammunition for
fighting a slump. After years of aggressive free marketeering, the tide
is turning towards ‘New Deal’ style intervention, and with luck this
will include massive investment in renewables.

The ODAC newsletter will be taking a break over the holidays and will return on January 9th. Season Greetings and Happy 2009!

Join us! Become a member of the ODAC Newsgathering Network. Can
you regularly commit to checking a news source for stories related to
peak oil, energy depletion, their implications and responses to the
issues? If you are checking either a daily or weekly news source and
would have time to add articles to our database, please contact us for more details.

barrt's picture
barrt
Status: Silver Member (Offline)
Joined: Aug 25 2008
Posts: 171
Re: When will we run out of oil? Never!
Damnthematrix wrote:

Are you KIDDING ME?  Are you an economist?  Because if I had my way, I'd have most economists lined up against a brick wall and shot at dawn.....  just look at the mess they've got us into?  It's BECAUSE economists do not understand geology or the importance of energy, its quality, its density, its availability, its portability, its WORTH even, that for decades, whilst it was so easily available it was sold waaaaay too cheap.  Oil, history will recall, was the most important and most valuable resource we ever wasted..  WASTED, got that?  Wasted on monster cars, wars,  population explosion, inappropriate agricultural practices, flying around the world for trivial holiday pursuits, the list is very long.....

There are NO substitutes for oil, and thanks to economics, the Party's over, and our children face very difficult times adjusting to economists' total mismanagement of energy resources. 

Couldnt agree with you more there Damthematrix, lets get that oil price back up there, there a loads of benifits of a high oil price, under 40 is a disaster for us all. I wonder if the Chinese et all are currently buying, I think i would be if i was in charge of all those dollars in china

And just to test the water, does everyone here agree to the idea that the price of oil was manipulated up to $147?

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: When will we run out of oil? Never!

ODAC Newsletter - 19 December 2008

Welcome to the ODAC Newsletter, a weekly roundup from the Oil Depletion
Analysis Centre, the UK registered charity dedicated to raising
awareness of peak oil.

Peak oil inched closer to official recognition this week as the
International Energy Agency’s chief economist Fatih Birol conceded that
conventional oil will peak by 2020.
This is somewhat more explicit and pessimistic than the IEA’s recently
published World Energy Outlook 2008. With luck his opinion will provoke
some free and frank discussion when Britain’s Energy Secretary Ed
Miliband hosts a summit with OPEC oil ministers in London today.

On the markets, even news of a record OPEC production cut
of 2.2 million barrels per day failed to stop the oil price hitting a 4
year low of $36/barrel, with attention focussed on collapsing demand in
the US and China,
and with the usual scepticism about the cartel’s ability to make any
agreement stick.  Such low prices set the market up for another spike
as soon as growth returns.

The depth of the economic crisis
was underscored as the Fed slashed interest rates almost to zero,
meaning it has all but exhausted the conventional ammunition for
fighting a slump. After years of aggressive free marketeering, the tide
is turning towards ‘New Deal’ style intervention, and with luck this
will include massive investment in renewables.

The ODAC newsletter will be taking a break over the holidays and will return on January 9th. Season Greetings and Happy 2009!

Join us! Become a member of the ODAC Newsgathering Network. Can
you regularly commit to checking a news source for stories related to
peak oil, energy depletion, their implications and responses to the
issues? If you are checking either a daily or weekly news source and
would have time to add articles to our database, please contact us for more details.

Damnthematrix's picture
Damnthematrix
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 3998
Re: When will we run out of oil? Never!
We have just had the close of the January contract for NYMEX WTI future, so when Bloomberg quotes the future price, they are now talking about the February contract which is effectively a bet on the price on January 22.
 
NYMEX Future closed at US$39.91 / barrel ( down 5.8% )
WTI Spot closed at US$31.41 / barrel  ( down 7.3% )
 
Not only is this a 5-year low, but also one of the biggest 1 day drops and difference between spot and next-month future price is the biggest I have seen.
 
Is there nobody out there that can explain this stuff ? If the banks and government can drive down the price of gold with continual loss-making short positions, wouldn't similar interventions be being applied to oil as well ?
 
The only thing I can imagine is that speculators are selling contracts hand over fist to pay off margin calls - this is certainly happening in all asset classes, but I don't know how much of an effect it is having on the oil price.

Also, there was talk of tankers idling with oil in them, as refineries stop taking deliveries. I don't know how this can be true, because people are still driving. Maybe deliveries are way down or something.

Nobody seems to be talking about it in any other terms than an oil price bubble bursting. Hah. Wait until demand reasserts itself next year.

Headless's picture
Headless
Status: Gold Member (Offline)
Joined: Oct 28 2008
Posts: 363
Re: When will we run out of oil? Never!

Damthematrix said:

"Is there nobody out there that can explain this stuff ? If the banks and government can drive down the price of gold with continual loss-making short positions, wouldn't similar interventions be being applied to oil as well ?"

I have discovered that the little I thought I did know, I didn't. Thus I know nothing--except: I am now completely devoid of trust as regards anything other than the messages I receive from my bodily impulses; they are not always reliable.

When in the such a state of mind, I find it easy to seek out the nearest corrupt-government explanation: We have been tapping our reserves in double-super-secret mode in order to break anyone and everyone who tries to speculate.

Picture big black trucks with internal mini refineries, mile long lines at midnight...

 

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