Peak Oil (was "petroleum geologist explains US war policy")

[Sasaferrato]

More oil is being discovered though, and in sizeable amounts.

 

[Kaka Tim]

Kamakshya Trivedi and Stacy Carlson from Goldman Sachs say a disturbing pattern has emerged where each tentative recovery in the world economy sets off an oil price jump that it turn aborts the process. A two point rise in global manufacturing indexes leads to a 30pc rise in oil prices a few months later.

This is a key point. Availablitiy of cheap energy (and that means oil) is an absolute requesite for economic growth. Every time growth increaes - the global economy hits the buffers of higher oil prices

 

[Kaka Tim]

More oil is being discovered though, and in sizeable amounts.

But its not easily accesable and will therefore be expensive or will use more energy to extact than it yields. This point is made over and over again and people still cant get there heads around it.

 

[hammerntongues]

But its not easily accesable and will therefore be expensive or will use more energy to extact than it yields. This point is made over and over again and people still cant get there heads around it.

the higher the price of oil moves the more can be spent on its extraction , some people cant get their head around that either .

 

[Crispy]

the higher the price of oil moves the more can be spent on its extraction , some people cant get their head around that either .

If everyone's heads aren't hurting from being got around all these things, then also consider the effect of this rising price on the wider economy. If businesses can't afford the oil they need, then demand drops and therefore so does oil revenue. If oil revenue drops, so does spending on expensive extraction techniques.

Also consider the *rate* of extraction. High oil price due to expensive extraction methods is exacerbated further if these expensive methods can only pump half as fast (and slowing with time) as the world would like to consume.

Finally consider how much energy it takes to extract the oil. If you extract 3 barrels by using the energy equivalent of 1 barrel, then you only really added 2 barrels to world supply.

 

[hammerntongues]

It`s called price rationing , it occurs in all commodities , if businesses or nations can afford the higher prices , or more to the point cannot afford not to , then prices will remain in balance . Right now the economies of China and India are more important than the Wests in driving prices higher , equally if their economies falter it will cause prices to drift again . I am no oil expert but the price of extracting oil and oil exploration investment has to be directly linked to prevailing barrel costs . High prices are only relative to the cost it takes to extract surely ?
Its not a happy outlook for nett importers of oil but in the long term prices will rise but there will be more oil available , I cannot see any possibility of any alternative .

 

[Falcon]

More oil is being discovered though, and in sizeable amounts.

Around 1 barrel is being discovered for every three consumed.

The quantities being discovered are not sizeable in relation to the quantities being consumed, even in gross terms.

Around one barrel of oil is now required for the discovery and manufacture of ten barrels of fuel - it used to be one barrel for every hundred barrels.

The quantities being discovered are even smaller in relation to the quantities being consumed, in net terms.

It`s called price rationing , it occurs in all commodities

Oil is not a commodity.

It is a finite substance.

If you accept that it is a finite substance, then you accept that there is a point, beyond which, replacement cannot take place.

Then, having admitted the existence of a point beyond which replacement cannot take place, you are arguing merely that we have not reached that point, without arguing why it cannot be now.

Meanwhile, if we were at that point, we would expect discovery and net mobilisation volumes to be independent of price.

Discovery and net mobilisation volumes are now independent of price.

Therefore we are at that point.

 

[hammerntongues]

Of course oil is a finite substance , as are coal , iron ore , copper and gold and other mined resources , but it is still a commodity , its besides the point anyway its just a word . None of these are replaceable or at least not before rather a long wait . Peak Oil is not the end of oil but the end of cheap oil , price rationing will eventually ensure the reduction in demand required to force us to switch to alternative power sources , its not going to be pretty but it will happen .

 

[Crispy]

The concern is that replacements can't be built as quickly as oil is going to decline. We will see.

 

[Dr Jon]

...
Peak Oil is not the end of oil but the end of cheap oil , price rationing will eventually ensure the reduction in demand required to force us to switch to alternative power sources , its not going to be pretty but it will happen .

Translation: It will become so scarce / expensive that we'll end up scratching around in the wreckage of industrial civilisation for anything else to burn

 

[hammerntongues]

Translation: It will become so scarce / expensive that we'll end up scratching around in the wreckage of industrial civilisation for anything else to burn

I have more faith in human ability to trend away from fossil fuels , whilst it is still relatively cheap and the cheapest fuel source currently available we will continue to use it until it is not . Change will come by economic necessity not by desire .

It is only an opinion of course , your vision of a Mad Max type future doesn`t fit with mine .

 

[teqniq]

I don't think 'trending away' is quite going to cut it.

 

[hammerntongues]

gradually decrease do it any better ? or slowly move away from ?

 

[teqniq]

Something a tad more drastic is called for imo but as there is no political will to do any such thing due to the existing system's reliance on oil, I have zero hopes that this will happen.

 

[Crispy]

Change will come by economic necessity not by desire .

The trouble is that economics as a whole is a predicated on cheap energy sources. If we wait for cheap energy to go away, then we have waited for the time at which replacing those sources will be prohibitively expensive.

I'm not as "mad max" as some round here, but I see nothing being built right now (and it needs to be right now) that has the capability to replace oil at the same speed that it will run out.

There will be a transition, but it will not be anything like business as usual while it happens, and most likely won't return to business as usual afterwards. I expect my children to grow up in a very different world.

 

[hammerntongues]

There is no doubt that our children will grow up in a very different world but it does not have to be a worse one necessarily . Forget the fact temporarily that we are running out fossil fuels , they are bad anyway , I genuinely believe that we will find via alternatives but the way our world functions means we will only find them when they can be produced cheaper than the existing source which is primarily oil . The technology is there in many cases it is just not possible to produce enough at the right price , yet .

Political will or intervention will do absolutely nothing ,it would probably even slow things down , it may be distasteful but its money that will drive technology forward .

 

[Crispy]

I genuinely believe that we will find via alternatives but the way our world functions means we will only find them when they can be produced cheaper than the existing source which is primarily oil.

Again, the trouble is that by the time this situation happens, industrial production will be so constrained by the high price of oil, that we may well not be physically able to build the hypothetical magic replacement at a rate fast enough to offset the decline in oil extraction rates.

"I'm sure we'll think of something" is not a rigorously thought-through argument (I know it's not exactly what you were saying).

 

[rover07]

The changeover to electric vehicles and renewable energy has already begun so Peak Oil is irrelevant.

California gets 20% of its electricity from renewables with projections of 33-40% by 2020. Nissan, Ford, BMW, Renault, Tesla are all gearing up to mass produce electric vehicles.

Government intervention is necessary to keep pushing the market but there will be no Mad Max scenario just commuters gliding about silently.

Oil demand is set to decline rapidly over the next 20 years.

 

[Falcon]

Of course oil is a finite substance , as are coal , iron ore , copper and gold and other mined resources , but it is still a commodity , its besides the point anyway its just a word

No. An essential property of a commodity is substitutability. Copper from Bolivia is indistinguishable from copper from Australia. Copper is a commodity.

The fluids that are being used to maintain liquid production rates against now diminishing sweet crude hydrocarbon - tar sand bitumen derivatives and biofuels - are not substitutes for sweet crude hydrocarbon. They have different chemical properties which render them unsuitable as substitutes for many applications, and they have different net energy characteristics which prohibit their economic substitution at the necessary scale.

Oil is not a commodity.

Nor is "energy" a commodity. Oil cannot be substituted by "renewably" derived electricity in the two major formats in which it is used in industrial economies - transportation, and industrial food production.

The difference is not beside the point. The fact that our primary energy supply is without substitute is of central relevance to our predicament.

 

[Falcon]

Of course oil is a finite substance , as are coal , iron ore , copper and gold and other mined resources , but it is still a commodity , its besides the point anyway its just a word . None of these are replaceable or at least not before rather a long wait . Peak Oil is not the end of oil but the end of cheap oil , price rationing will eventually ensure the reduction in demand required to force us to switch to alternative power sources , its not going to be pretty but it will happen .

In the Irish Potato Famine, there was another word for "price rationing" - famine. There was another term for "reduction in demand" - death by starvation.

You appear to be saying more or less the same thing.

 

[hammerntongues]

No. An essential property of a commodity is substitutability. Copper from Bolivia is indistinguishable from copper from Australia. Copper is a commodity.

The fluids that are being used to maintain liquid production rates against now diminishing sweet crude hydrocarbon - tar sand bitumen derivatives and biofuels - are not substitutes for sweet crude hydrocarbon. They have different chemical properties which render them unsuitable as substitutes for many applications, and they have different net energy characteristics which prohibit their economic substitution at the necessary scale.

Oil is not a commodity.

Nor is "energy" a commodity. Oil cannot be substituted by "renewably" derived electricity in the two major formats in which it is used in industrial economies - transportation, and industrial food production.

The difference is not beside the point. The fact that our primary energy supply is without substitute is of central relevance to our predicament.

Whether we decide oil is or is not a " commodity " the fact remains that it can be substituted , the key is can it be substituted economically , at present the answer is a most definite no . However it is my opinion and obviously one you don`t have to agree with that over the next few decades we will gradually develop by necessity more and more viable substitutes . It won`t happen overnight but those industries that cannot survive on high fuel costs will have to adapt or die , either way it will result in lower oil consumption .

We are not going to run out of oil any time soon , Peak oil is only the point where production cannot keep up with consumption.

Wind , Solar , Hydro , Biodiesel have all made massive leaps in technology in a relatively short space of time , electric cars are very close to being commercially available as an economic alternative to petrol driven cars and as with all technology the closer it comes to making the developers money the quicker it will made available to the masses .

Don`t read me wrong , there is obviously a long long way to go but we are a resourceful bunch and I think there is every chance that eventually we will end up in a much better cleaner environment , assuming the icecaps don`t melt and see us off , which is something I personally would be more worried about .

 

[hammerntongues]

In the Irish Potato Famine, there was another word for "price rationing" - famine. There was another term for "reduction in demand" - death by starvation.

You appear to be saying more or less the same thing.

Peak oil vs the Irish Potato famine ? where did that come from .

The poor Irish did not have time to prepare for what was coming in 1845 , if they did things would almost certainly be different , thankfully we do .

 

[Kaka Tim]

Whether we decide oil is or is not a " commodity " the fact remains that it can be substituted , the key is can it be substituted economically , at present the answer is a most definite no . However it is my opinion and obviously one you don`t have to agree with that over the next few decades we will gradually develop by necessity more and more viable substitutes . It won`t happen overnight but those industries that cannot survive on high fuel costs will have to adapt or die , either way it will result in lower oil consumption .

We are not going to run out of oil any time soon , Peak oil is only the point where production cannot keep up with consumption.

Wind , Solar , Hydro , Biodiesel have all made massive leaps in technology in a relatively short space of time , electric cars are very close to being commercially available as an economic alternative to petrol driven cars and as with all technology the closer it comes to making the developers money the quicker it will made available to the masses .

Don`t read me wrong , there is obviously a long long way to go but we are a resourceful bunch and I think there is every chance that eventually we will end up in a much better cleaner environment , assuming the icecaps don`t melt and see us off , which is something I personally would be more worried about .

The point is that becasuse we are at - or close to - the peak of oil production the world will not be able to produce enough energy to match its energy consumption - even with the best case scenarios for renewables.
Yes - with huge investment in renewable, greater enregy efficiency and an end to over consumption humans will continue to survive and prosper. The problem is getting to that point.

The whole global economy is based on year on year economic growth and you cant have that without using more energy. In addition oil based fertelisers are fundamental for global food production in a way that renwables cant replace.

No amount of breezy optimism (hey - we're resourceful - something will come up etc) can get round the fact that peak oil will mean severe ecnomic contraction and rocketing food prices. There is a strong case that the economic slump we are expericiencing is part of this - as pointed out a few posts above every time the economy splutters back into life, energy prices go up and kill it off.

A prolonged economic slump will have increasingly negative effects on billions of people -especaillaly those with the least wealth. It is them who will have to consume less - rather than the rich and powerful who will continue to protect their high consumption lifestyles and wealth through violence.

The worst case scenario is mad max - the best case we create a differnt, more equal econmic system with a steady transition to renwables. But getting there is going to be painful and we will very likely see more unemployment, increasinging poverty and social misery in the developed world and more war and famine in the poorest regions.

Oh - and global warming. As energy resources become more expensive, the most likely cheap and readily available alterative to oil is not solar panels or wind - but coal.

 

[Crispy]

It's the transportation problem that needs solving, and it's a much MUCH bigger problem than replacing your petrol car with an electric one. The distribution of food, commodities, materials, goods etc. is almost entirely dependent on oil, for which there is no substitution. Good luck running these on coal:

And no, biofuels do not count, unless you want to starve because all the world's arable land is being used to grow fuel crops.

 

[laptop]

Good luck running these on coal:

 

[rover07]

Electric ship?

 

[Crispy]

It would be interesting to do some back-of-envelope calculations to work out the logistics of electrifying the world's railways and roads. How much steel and copper. How much additional generating capacity. How many electric trains and trucks. How quickly it could be built.

I suspect, but am ready to be proved wrong, that declining oil production would a)make it harder to build as time goes on and b)race ahead of our attempts to catch it up.

Electric boats? Forget about it.

 

[Kaka Tim]

The point about coal was not that its the 'answer' but that using less oil is not necessarily good for the climate - as their will be ever increasing pressure to use more coal for electrical generation and to save the oil for stuff where its harder to replace (like a lot of transportation).

 

[hammerntongues]

It would be interesting to do some back-of-envelope calculations to work out the logistics of electrifying the world's railways and roads. How much steel and copper. How much additional generating capacity. How many electric trains and trucks. How quickly it could be built.

I suspect, but am ready to be proved wrong, that declining oil production would a)make it harder to build as time goes on and b)race ahead of our attempts to catch it up.

Electric boats? Forget about it.

Back in the day ships did have sails I seem to remember , solar and wind are both free and inexhaustible sources of power ? Its clearly not viable in todays context , we may need to slow everything down but its not impossible if needs must .

 

[Falcon]

over the next few decades we will gradually develop by necessity more and more viable substitutes . It won`t happen overnight but those industries that cannot survive on high fuel costs will have to adapt or die , either way it will result in lower oil consumption .

We are not going to run out of oil any time soon , Peak oil is only the point where production cannot keep up with consumption.

There are many systems that exibit the property that a small change in input gives rise to a large change of state.

Falling off your bike is "only" the point at which the bike's forward velocity falls below a critical minimum - you are still moving forward at the point you fall off, and only a fraction slower than the speed at which you were stable.

Consumption by a bear is "only" the point where your running velocity falls a fraction below the bear's - you are still running flat out at the point you are consumed, and only a fraction slower than the speed at which you were alive.

Thereafter, you don't gradually fall off your bike, and you don't gradually get eaten.

The industrial manufacturing system (the apparatus which the viable substitutes you hope for depend on) depends on the global political economy, and it depends on a monotonically increasing supply of net energy (because of the rules of fractional lending, compound interest bearing, debt based finance). The financial system doesn't gradually stop working at the point when production cannot keep up with consumption. It stops.

This isn't hypothetical. The supply of net energy stopped rising in 2005. The global financial system entered its terminal phase in 2008 - the illusion of viability is currently being sustained through the issuance of synthetic debt (a.k.a. "quantitive easing") - an unsustainable process.

We will not gradually develop more and more viable substitutes, because the system upon which such development depends will have ceased to function.