Systemic Collapse: The Basics

[free spirit]

Adding more people to a world population which already grossly exceeds sustainable levels is hardly going to make things better, is it?

not really my point.

I was referring to people who're actively working to make the world more sustainable / increase the worlds carrying capacity / reduce our reliance on fossil fuels / however you want to put it, rather than people who did a lot of shagging without condoms.

I've absolutely no problem with people operating well thought out family planning advice centres in areas with high birth rates etc. (as long as they're not catholic / fundamentalist christian missionaries promoting abstinence and refusing people access to other birth control methods).

 

[SpineyNorman]

Peak oil isn't about running out. We've obviously not run out of oil, as it's still readily available at the petrol stations albeit at double the price it was not so long ago.

Peak oil is essentially about the point at which our ability to increase the rate at which we're pumping oil from the ground ends, and we reach the maximum ever annual output of oil.

I don't think any of the main protagonists on this or t'other thread actually have any particular difference of opinion on the basics of this, or that we're either at, very close to or just past this peak point.

The difference of opinions largely boil down to whether we'll actually remain at or around this peak point for any length of time, or whether production rates are now, or will shortly be dropping off significantly, and at what rate.

Falcon's right to point out that much of the peak has so far been masked through the increased use of unconventional oil such as oil from tar sands, as well as biofuels. Even the most optimistic would have to concede that these unconventional sources will not be able to replace conventional sources if/when the rate of decline in conventional oil really starts kicking in.

The global recession has also 'helped' by cutting demand, and allowing the politicians to continue turning a blind eye to the issue as they've been able to lay all the blame at the door of the banks.

Or to put it another way, do we have time still to put measures in place to enable us to reduce the impact of any reduction in oil availability, or are we utterly fucked (and if so should we still take what action we can, or run around like headless chickens screaming 'woe is me' at anyone who'll listen).

Personally, I veer between the positions of

'we're probably a bit fucked but must do what we can as early as possible to mitigate the worst potential impacts of the inevitable decline in conventional oil sources'

to

'Oil including unconventional sources should continue to be available at or around current levels for the next few years, before it starts to really fall singificantly, so we must do what we can as early as possible to mitigate the worst potential impacts of the inevitable decline in conventional oil sources.'

One further vital point that often get's missed in this is that oil is just one of many energy sources on which we rely. It is a vitally important energy source and no mistake, but viewing oil as part of the overall energy mix helps to put things into a bit better perspective.

Oil makes up approximately 33-34% of the worlds primary energy supply, so eg a 50% reduction in oil production would lead to around a 16-17% shortfall in the worlds primary energy supply, which is certainly significant, but nowhere near as catastrophic as is implied when people quote the percentage reductions in oil production in isolation.

For comparison, renewables currently make up around 8% of global primary energy production, and at recent rates of increase could well be approaching 16-17% by 2020 or so, and maybe 25-30% by 2030.

Soooo the real questions are what the actual rate of decline in oil production will be, what the starting point will be, how much can be made up from unconventional sources (allowing for the additional energy consumption in the production of those sources), how much can be made up from gas, coal, nuclear, how much can be made up from renewables (allowing for increased consumption during their deployement, but also greater efficiencies when in use), and how much we can increase the efficiency of our use of these energy resources globally without negatively impacting on the economy or living standards.

There are also issues with how much, where and how quickly oil can be substituted for another energy source, as for example, you can't simply plug a petrol car in to the mains, but can potentially replace a petrol car with an electric car, though this process will take far longer to have an impact than if you could simply substitute the fuels for one another.

This is intended as a brief overview of the sources of contention in this and the other threads.

Sorry, should have been clearer - I meant we've already run out of ways to increase the amount of oil we can extract from the ground at any one time.

Thanks for the post though, a nice, concise summary

 

[elbows]

Yup. Your data is aggregate UK, Norway and Denmark. Statfjord (Norway) and DUC (Denmark) enter decline next month so your data is optimistic both in general and as a proxy for UK. UK production is already down 16% on this time last year (ref), and 5 figure leaks are now routine and accelerating (e.g. reference).

Your original point (I believe) was that the original posting was a "mess of misinformation". Part of the evidence you supported your point with was refutation of the OP's claim that the UK is facing massive energy shock. To be clear, even a 10% annual reduction (reading the optimistic aggregate from your own graph) is a halving time of 7 years. A halving time of 7 years is a massive energy shock. I reject your claim.

You have confused me with someone else. I've only been making two main points on this thread:

Firstly I didn't like that some of your posts made it sound like global oil production is already falling at a significant rate. This hasn't happened yet. I expect it will, but I also expect that very few of us would care to make concrete predictions as to when exactly this production decline, rather than plateau, begins. You wouldn't answer this directly when I asked, so I assume that you don't know either. Which is fine, its ok not to know, and we can still talk about the expected future production trends, just stop pretending that what is to come is already happening now, or last year. Whats happening now is the result of a plateau, not a decline. If anything you should support this assertion because when we look at the negative effects that a plateau or extreme slowing of growth rates has already had, it helps your point that we've already run out of time. Or to put it another way, the absence of growth already causes lots of shit and a situation that our systems struggle to cope with, let alone what happens when notable decline begins.

My second point was very specifically about a single post you made where I believe you said something erroneous about the nature of yearly production decline rates. The year-on-year decline rate of a given year cannot be assumed to be greater or equal to the decline of the previous year. Sometimes it will be but sometimes it won't, and a the north sea had such a rubbish year last year for a range of specific reasons, that a slower decline this year than last cannot be ruled out at all. In fact if one year in particular sucks real bad due to temporary issues, its even possible to have a production increase the next year, without this making very much difference to the overall declining trend.

A prime reason why I have been blithering on about this stuff is that I believe the situation is already so bad that there is really no need to make it sound even worse. I haven't been taking an interest in peak oil for a decade only to risk the credibility of my worldview by attaching a false sense of immediacy to a specific aspect of the woe. I can say that we appear to be plateauing, and that long term trends of the past, along with a lack of miraculously large new finds, suggest that a decline could follow soon (and will definitely happen at some point). I cannot say the decline has already started, although even if there were signs that it had I would have to wait a while to make sure it wasn't a bump on the plateau rather than the beginning of a mostly continuous decline. Especially since the medium-term possibilities of unconventional oil are not 100% certain. There are some stupidly optimistic estimates regarding shale oil in the USA, which I would be a fool to bank on, but neither can I completely rule out the possibility that such things will manage to cause a total production increase of relatively modest size in the years to come.

Take the situation at Ghawar for example. There are articles from at least as early as 2001 that talk about how this field is dying. Well we would expect this field to decline badly at some point, and there are signs that it is becoming harder for them to maintain production rates at this field, but thats not the same thing as production already being in decline at this field. When this happens in a significant way we will ever a new phase of the crisis, and if nothing else has come online to temporarily compensate for this decline, you will find me posting in language that is far more dramatic and immediate than anything I've been moaning at you for saying in this thread.

 

[elbows]

if you remove the main essence of humanity from the equation, it's hardly surprising that you'd struggle to justify our continued existence on the planet.

I'd contend that it would be a crime against both our ancestors and future generations for us to give up at this point just because we came across a bit of a problem with our current way of life. Think of the shit that they had to go through to get humanity to this point, then get a grip, put our current situation into perspective and start doing your bit to get humanity through this situation as best we can. Or as a minimum get out of the way and let those of us who are doing our best to solve the problems get on with it without having to fight against all this negative woe is me bollocks all the time.

I don't think there really is an option called 'giving up' though is there?

And the negative stuff doesn't really get in the way of tackling the problem, although it does introduce some potentially unsavoury solutions/poltics/ideas.

Rather what stands in the way of the path you describe is denial of the problem, a belief that special effort and redirection of presently available resources is not required, and that a happy solution will be found just because necessity is the mother of invention.

Part of the reason that I moan about excessive proclamations about the state we have already reached, and the extreme negativity towards chances of mitigation, is that it will turn some people off from believing there is a problem at all. Not worried that everyone will just give up completely as a result of such excessively gloomy predictions, but rather that it gives people an easy excuse not to buy into the belief that there is a problem at all.

e.g. the Wile E Coyote cartoons that were posted.

 

[SpineyNorman]

post cut - reserved for new thread...

ETA:
Ah free spirit has quoted it already so I'll put it back:

Can you give me a single non-subjective, non-personal, non-emotional, objective, rational reason to propagate our species?

Have you started the other thread yet? I have answers for this, but don't want to derail this thread if we can better discuss it elsewhere.

 

[free spirit]

And the negative stuff doesn't really get in the way of tackling the problem, although it does introduce some potentially unsavoury solutions/poltics/ideas.

I disagree.

It's one thing to say to people 'here's a problem, but if we take these actions then we can minimise its impacts"

another thing entirely to then also have people loudly proclaiming 'no, the problem is so big that we're all fucked, and 6 billion people are going to be wiped off the face of the earth and there's fuck all we can do about it.

the people saying the latter are preventing the people saying the former from being heard properly / putting people off from even contemplating the subject, and thus preventing the necessary response from being taken every bit as much as those who're denying there is a problem at all.

it's akin to the way the 911 conspiraloon tendency distracted from discussions about the actual real world provable deficiencies in the Bush regimes approach to AQ that gave them free reign in the run up to 911, or their documented desire for war against Iraq on whatever pretext they could find etc.

 

[Dr Jon]

Have you started the other thread yet? I have answers for this, but don't want to derail this thread if we can better discuss it elsewhere.

Thanks. Not started it yet, but I'll PM you when I do.

 

[SpineyNorman]

ok

 

[Falcon]

You have confused me with someone else.

Yes, I have, and I apologise.

I've only been making two main points on this thread: Firstly I didn't like that some of your posts made it sound like global oil production is already falling at a significant rate. This hasn't happened yet.

Yes. It actually has. It only appears to you not to have because you have failed to distinguish (as do most people) between the two fundamental types of oil - affordable, and unaffordable. ("Unaffordable" being used here in both an economic sense and an atmospheric emissions sink saturation sense).

The supply of affordable oil is falling at a significant rate - specifically, around 9 or 10% per annum. The fact that there is a liquid being produced that is so unaffordable that the Bank of England has had to print £325 billion of synthetic debt to generate the 0.3% GDP growth necessary to preserve the illusion that our economy is not now terminally insolvent is indistinguishable from there being no incremental liquid being produced.

It is even worse than that. Were we to take the threat of climate instability seriously, we would be forced to leave 80% of all remaining reserves in the ground despite their affordability, collapsing the world stock markets (the so-called "Carbon Bubble").

Any production in excess of either of those two limits is a hallucinatory product of our failure to price oil correctly. That which you are counting as the "production" sustaining a plateau is, in fact, un-producible, both economically and scientifically. In the context of a thread about systemic collapse, this is a highly relevant point, don't you think?

I haven't been taking an interest in peak oil for a decade only to risk the credibility of my worldview by attaching a false sense of immediacy to a specific aspect of the woe.

Referring to the previous point, I can't think of a better reason why a sense of immediacy needs to be attached than the occasion of a guy who has been taking an interest for over a decade still failing to recognise why one is needed.

 

[ItWillNeverWork]

The fact that there is a liquid being produced that is so unaffordable that the Bank of England has had to print £325 billion of synthetic debt to generate the 0.3% GDP growth necessary to preserve the illusion that our economy is not now terminally insolvent is indistinguishable from there being no incremental liquid being produced.

So nothing to do with the credit crunch then?

 

[free spirit]

So nothing to do with the credit crunch then?

the credit crunch didn't just magically appear from nowhere. Sure it had it's roots in a property bubble, dodgy lending practices, and financial shenanegans, but the thing that finally pricked that particular bubble was in essence the massive rise in the oil price, particularly noticeable in US pump prices from about 2005-6 onwards.

 

[ItWillNeverWork]

the credit crunch didn't just magically appear from nowhere. Sure it had it's roots in a property bubble, dodgy lending practices, and financial shenanegans, but the thing that finally pricked that particular bubble was in essence the massive rise in the oil price, particularly noticeable in US pump prices from about 2005-6 onwards.

It's a plausible account for sure, but do you have any evidence that it was the rising oil price that burst the bubble, as opposed to the bubble driving up oil prices? I don't have a fixed opinion on this by the way, I'm just asking for further proof.

 

[Falcon]

It's a plausible account for sure, but do you have any evidence that it was the rising oil price that burst the bubble, as opposed to the bubble driving up oil prices? I don't have a fixed opinion on this by the way, I'm just asking for further proof.

Yes.

Source: "The Oil Crunch: A wake-up call for the UK economy (2010) p.16 " (link - PDF)

Both the price rise and the bubble collapse were preceded by a third factor - stagnating global supply. The credit crunch is an outcome of peak (affordable) oil.

 

[SpineyNorman]

Well if you look at post-war downturns they do tend to correspond to spikes in oil prices. I'm still getting my head round this stuff too, not ready to form a proper opinion yet really.

 

[free spirit]

It's a plausible account for sure, but do you have any evidence that it was the rising oil price that burst the bubble, as opposed to the bubble driving up oil prices? I don't have a fixed opinion on this by the way, I'm just asking for further proof.

they aren't 2 opposing things.

the bubble certainly helped to drive up demand for oil that in turn drove up oil prices as that demand bumped against the production ceiling, and this was greatly exacerbated by oil price speculation on the financial markets that turned a hill into a moutain.

But this then unquestionably played a significant part in pricking the bubble.

Think about the aspect of the US economy that collapsed first, and then took the rest with it... ie sub prime mortgages.

What other factor was there that prevented these sub prime mortgage owners on mass from changing from just being able to meet their payments to not being able to meet them, other than the doubling of the pump price for the gasoline they relied on to get to work and back (rising from $1.80/G or so in 2004 to over $3/G in early 2007, and $4/G in early 2008).

Unemployment in this period was falling, so it wasn't that, something else must have been the trigger, and the oil price rises are the only obvious candidate that can really explain it (compounded by the freezing of the minimum wage from 2000 to 2006).

 

[elbows]

Yes, I have, and I apologise.

Cheers.

Yes. It actually has. It only appears to you not to have because you have failed to distinguish (as do most people) between the two fundamental types of oil - affordable, and unaffordable.

Surely its you that failed to distinguish these different varieties of oil in many of your posts. If you want to talk about easy oil declining then fine, good, its worth plenty of discussion.I even brought it up in an attempt to find the common ground between peole in this thread! If you make sure to make it clear that you mean this and not total oil production, you'll run much less risk of peole thinking you are talking shit.

The supply of affordable oil is falling at a significant rate - specifically, around 9 or 10% per annum. The fact that there is a liquid being produced that is so unaffordable that the Bank of England has had to print £325 billion of synthetic debt to generate the 0.3% GDP growth necessary to preserve the illusion that our economy is not now terminally insolvent is indistinguishable from there being no incremental liquid being produced.

That may be slightly overstating the point, since there is at least a little bit of room to debate what exactly is affordable. But in a slightly more general sense I agree. We should also try to separate two different sorts of unaffordability - the cost of exploiting specific tricky reserves, and the market price of oil in general which has been affected by overall production levels vs demand.

In fact, it is even worse than that. Were we to take the threat of climate instability seriously, we would be forced to leave all unproduced reserves in the ground despite their affordability, and production would fall instantly to zero tomorrow.

Im not sure there are many people who believe that we have to completely halt all production & consumption of all fossil fuels in order to take climate change seriously. I have little doubt that we need to do far, far more than is actually being proposed in the mainstream, but going on about production falling to zero tomorrow is a classic example of words you say that make me rant at the overblown nature of your posts. Whats be be gained from overstating the point so dramatically?

That which you are counting as the "production" sustaining a plateau is, in fact, un-producible, both economically and scientifically. In the context of a thread about systemic collapse, this is a highly relevant point, don't you think?

I havent a clue what you mean, especially as I offer no solid prediction that the plateau will last ages (although in theory it might last a while, depends how the older fields hold up in the short-mediumish term).

I read stupidly optimistic expectations about oil production from time to time, and I think 'not much chance of that happening, dream on'. But since my worst-case fears already failed to be met from the period of 2005-today, I don't fancy getting carried away with immediacy as it regards daily production declines right now.

Referring to the previous point, I can't think of a better reason why a sense of immediacy needs to be attached than the occasion of a guy who has been taking an interest for over a decade still failing to recognise why one is needed.

That depends what sort of immediacy I was referring to. I was born in 1975 and in my opinion we should have been transitioning in a certain way, with a 'not business as usual' attitude since at least then. So I don't think we have time now to sit around and play with our balls. What I was referring to was simply the tendency to make it sound like we are already part way down the slippery slope, rather than wobbling on the plateau. Whe it comes to the systemic implications I think its fair to say that we are already well into the period where the existing system cannot cope, but I do not rule out the possibility of propping it up here and there in a manner which provides some resources to take action. I I dont think it will be enough to transition smoothly and avoid pain, and any additional time that is won stands a fair chance of being squandered. But your tendency to utterly reject any factor that may even slightly reduce the velocity of our descent compels me to post time and time again in these sorts of threads. The same sort of thing happens elsewhere when I discuss Fukushima with some people, I do not underestimate the nature of the disaster and its implications, yet the hysterical goofs who want to turn the disaster into a bad b-movie end up accusing me of being a shill for the authorities or company that owned the plant, just because I don't want to shriek as loudly as they do.

Its a bloody nightmare with profound implications, it shouldn't require additional hyping.

 

[elbows]

I disagree.

It's one thing to say to people 'here's a problem, but if we take these actions then we can minimise its impacts"

another thing entirely to then also have people loudly proclaiming 'no, the problem is so big that we're all fucked, and 6 billion people are going to be wiped off the face of the earth and there's fuck all we can do about it.

the people saying the latter are preventing the people saying the former from being heard properly / putting people off from even contemplating the subject, and thus preventing the necessary response from being taken every bit as much as those who're denying there is a problem at all.

it's akin to the way the 911 conspiraloon tendency distracted from discussions about the actual real world provable deficiencies in the Bush regimes approach to AQ that gave them free reign in the run up to 911, or their documented desire for war against Iraq on whatever pretext they could find etc.

I suppose I have to agree with that, since I went on to make a very similar point in the post quote quoted. So there was a bit of a contradiction in what I was saying really, and the utter doomhypers are part of the problem.

Both a denial that there is a problem, and the idea that the problem is too massive to even bother tackling, are excuses for inaction now.

Given that any solutions will have to be about the demand side as much as they are the supply side, I've lost a fair bit of hope that enough people will be proactive enough to meet the problem face-to-face. Not enough people are going to decide they don't mind voluntarily giving up their cars, to pick a crude example, and so they are likely to face the oil problem not directly but via an economic proxy. Austerity is already with us, and who knows for how long this will remain the face of the crisis.

 

[free spirit]

I suppose I have to agree with that, since I went on to make a very similar point in the post quote quoted. So there was a bit of a contradiction in what I was saying really, and the utter doomhypers are part of the problem.

I did wonder about that

 

[Falcon]

Surely its you that failed to distinguish these different varieties of oil in many of your posts.

One of the many advantages of tolerating the incremental nature of internet debate, and allowing conversation to unfold.

That may be slightly overstating the point, since there is at least a little bit of room to debate what exactly is affordable.

Actually, it is possible to estimate it quite accurately. Kopitz, S. (2009), Oil: What price can America afford? shows recession occurs whenever crude oil expenditure exceeds 4% of GDP (currently $80 per barrel for the US), or overwhelms oil shedding by rising at more than 0.8% of GDP on an annual basis. Hamilton, J. (2011), Historical oil shocks, Handbook of Major Events in Economic History shows that 10 out of 11 post-World War II recessions in the United States were preceded by a sharp increase in the price of crude petroleum equivalent to about $90 at today's price. Chen, S.-S. & Hsu, KW. (2012), ‘Reverse globalization: Does high oil price volatility discourage international trade?’ shows that the excursion above $90 has instigated deglobalisation. The economy stops working at an oil price over $90 in the sense that it has to be placed on the life support machine of Quantitive Easing above that. This calibrates and quantifies "affordability".

Im not sure there are many people who believe that we have to completely halt all production & consumption of all fossil fuels in order to take climate change seriously.

I apologise, I edited the wording after you quoted me. Having double checked, we have to leave 80% of remaining carbon reserves unburned, not all of them. Read the Potsdam Institute's research report. We have an 886 GtCO2 global carbon budget for 2000-2050 to reduce the chance of exceeding 2deg warming to 20%. Minus emissions from the first decade of this century, this leaves a budget of 565 GtCO2 for the remaining 40 years to 2050. The total carbon potential of the Earth’s known fossil fuel reserves comes to 2795 GtCO2. 65% of this is from coal, with oil providing 22% and gas 13%. This means that governments and global markets are currently treating as assets, reserves equivalent to nearly 5 times the carbon budget for the next 40 years. The investment consequences of using only 20% of these reserves have not yet been assessed.

Think the "many people" to which you refer have mugged up on all of this? I'd assert you are committing a specific type of failure of reasoning known as "fallacy by consensus".

I havent a clue what you mean, especially as I offer no solid prediction that the plateau will last ages (although in theory it might last a while, depends how the older fields hold up in the short-mediumish term).

It is sufficient that you perceive there to be any plateau at all.

 

[love detective]

Think about the aspect of the US economy that collapsed first, and then took the rest with it... ie sub prime mortgages.

What other factor was there that prevented these sub prime mortgage owners on mass from changing from just being able to meet their payments to not being able to meet them, other than the doubling of the pump price for the gasoline they relied on to get to work and back (rising from $1.80/G or so in 2004 to over $3/G in early 2007, and $4/G in early 2008).

Don't have much time to do a proper response to this at the moment but a large part of what made sub prime mortgages just affordable at one point and not affordable at another, is that the majority of these mortgages had introductory offers which means the borrower paid a much lower rate for the first couple of years, making their payments affordable at the time, and with the promise of a booming property market the possibility was there to remortgage of the back of the increasing price to other mortgages which had similar 'teaster' introductory offers.

The reality is that when a lot of these introductory/teaser offers came to an end, the refinancing wasn't possible and homeowners were hit with an effective doubling of their mortgage payments overnight - this started off a rolling pattern of defaults as soon as the teaser period ended. I remember in the autumn of 2007 looking at a graph of US mortgages showing the value of mortgages that were due to have their teaser rates reset over the next 5 years or so and thinking that this was going to be catastrophic - and it was

I don't buy at all this attempt to link the crash to oil prices (correlation doesn't prove cause remember) - i'd say the reverse and that it was the crash that reduced oil prices because of the obvious recessions/depressions that it was soon to provoke/cause

 

[Falcon]

I don't buy at all this attempt to link the crash to oil prices (correlation doesn't prove cause remember) - i'd say the reverse and that it was the crash that reduced oil prices because of the obvious recessions/depressions that it was soon to provoke/cause

(1) supply stagnation -> (2) price rise -> (3) crash-> (4) price fall

Of course the crash caused price to revert. We are interested in why it rose in the first place.

Correlation doesn't prove cause, but logic strongly indicates it. For your theory to be valid, you would need some plausible explanation for why supply stagnated from 2004 despite strongly increasing demand in China, India and Brazil. You would then need to explain why it was not this stagnation that caused the price rise but some other factor, and why it was some irregularity in the financial market that caused the collapse and not the systematic increase in the price of oil/heating/transportation/food.

You've ignored (1) and (2).

 

[free spirit]

Given that any solutions will have to be about the demand side as much as they are the supply side, I've lost a fair bit of hope that enough people will be proactive enough to meet the problem face-to-face. Not enough people are going to decide they don't mind voluntarily giving up their cars, to pick a crude example, and so they are likely to face the oil problem not directly but via an economic proxy.

Provide people with decent low energy alternatives and they generally don't particularly mind switching to them, particularly if they can save money doing it.

A major part of the problem with UK policy in this regard over the last couple of decades is that the governments have been very keen to levy environmental taxes, but completely ignored the flip side of the coin relating to spending that money on providing decent low carbon alternatives for people.

Austerity is already with us, and who knows for how long this will remain the face of the crisis.

Unfortunately austerity is the polar opposite for what is desperately needed here, which is massive investment in energy saving measures and low carbon energy generation, while we still have both the time and the energy capacity available to make this transition.

At the same time this would provide a massive boost to the economy, massively cut unemployment rates, increase tax revenues and decrease welfare payments so we could end up paying our debts off as well - something that's never going to happen from austerity measures.

This government will be judged very badly by history for it's current suicidal economic, environmental and energy policies, as will many others around the world.

 

[elbows]

Actually, it is possible to estimate it quite accurately. Kopitz, S. (2009), Oil: What price can America afford? shows recession occurs whenever crude oil expenditure exceeds 4% of GDP (currently $80 per barrel for the US), or overwhelms oil shedding by rising at more than 0.8% of GDP on an annual basis. Hamilton, J. (2011), Historical oil shocks, Handbook of Major Events in Economic History shows that 10 out of 11 post-World War II recessions in the United States were preceded by a sharp increase in the price of crude petroleum equivalent to about $90 at today's price. Chen, S.-S. & Hsu, KW. (2012), ‘Reverse globalization: Does high oil price volatility discourage international trade?’ shows that the excursion above $90 has instigated deglobalisation. The economy stops working at an oil price over $90 in the sense that it has to be placed on the life support machine of Quantitive Easing above that. This calibrates and quantifies "affordability".

Thanks for the references, its been a few years since I looked at this stuff so I will have another gander soon. Such numbers are broadly in tune with my prior understanding of this issue, although again I suspect that two different things might be getting mixed up when us two are discussing this stuff.

Your continued desire to mock my description of oil supply as presently plateauing is I assume down to the stuff you have said about how much of this oil being produced is from 'unaffordable' fields. But the price of extracting the oil from these fields is not the same as the price of oil. So lets keep the discussion about what oil price messes up the global economy distinct from what price we can afford to pay for extracting oil from a particular field. The two are related, but they are not the same, their relationship is interesting but sometimes for reasons quite opposite to what you are trying to suggest. I'm sure Ill return to this point in the near future as Im not sure I've explained exactly what I mean.

I apologise, I edited the wording after you quoted me. Having double checked, we have to leave 80% of remaining carbon reserves unburned, not all of them. Read the Potsdam Institute's research report. We have an 886 GtCO2 global carbon budget for 2000-2050 to reduce the chance of exceeding 2deg warming to 20%. Minus emissions from the first decade of this century, this leaves a budget of 565 GtCO2 for the remaining 40 years to 2050. The total carbon potential of the Earth’s known fossil fuel reserves comes to 2795 GtCO2. 65% of this is from coal, with oil providing 22% and gas 13%. This means that governments and global markets are currently treating as assets, reserves equivalent to nearly 5 times the carbon budget for the next 40 years. The investment consequences of using only 20% of these reserves have not yet been assessed.

Think the "many people" to which you refer have mugged up on all of this? I'd assert you are committing a specific type of failure of reasoning known as "fallacy by consensus".
It is sufficient that you perceive there to be any plateau at all.

Thats more like it, so much better detail that enables people to build a picture than claims that all production must drop to 0 tomorrow. Detail that doesn't make the problem vastly smaller, but takes away the phoney 'instant and total doom' that has little purpose other than to risk 'he cried wolf' write-off of your ideas when the total woe turns out not to happen in a heartbeat. We are only having this argument because its a long emergency not a quick one, and there is a u75 thread thats been going for 10+ years to prove it.

The interesting thing about the 80% figure and what the "many people" might believe is the level of action required, is that there is another, different but related 80% figure thats been floating around for years now. The UK 'committed' to greenhouse gas emission reductions of at least 80% of 1990 levels by 2050. Some years ago when the climate change message in the uk mainstream was turned up to a reasonable volume, I often had cause to grimace and ponder how much of this agenda was handily being used to set the same sort of targets as would happen if it was peak oil they were admitting to and vowing to tackle as our greatest challenge. I don't mean that I am skeptical about climate change itself, but I cannot help but marvel at the timing of when we decided to begin to talk about taking this seriously.

 

[SpineyNorman]

Peak oil isn't about running out. We've obviously not run out of oil, as it's still readily available at the petrol stations albeit at double the price it was not so long ago.

Peak oil is essentially about the point at which our ability to increase the rate at which we're pumping oil from the ground ends, and we reach the maximum ever annual output of oil.

I don't think any of the main protagonists on this or t'other thread actually have any particular difference of opinion on the basics of this, or that we're either at, very close to or just past this peak point.

The difference of opinions largely boil down to whether we'll actually remain at or around this peak point for any length of time, or whether production rates are now, or will shortly be dropping off significantly, and at what rate.

Falcon's right to point out that much of the peak has so far been masked through the increased use of unconventional oil such as oil from tar sands, as well as biofuels. Even the most optimistic would have to concede that these unconventional sources will not be able to replace conventional sources if/when the rate of decline in conventional oil really starts kicking in.

The global recession has also 'helped' by cutting demand, and allowing the politicians to continue turning a blind eye to the issue as they've been able to lay all the blame at the door of the banks.

Or to put it another way, do we have time still to put measures in place to enable us to reduce the impact of any reduction in oil availability, or are we utterly fucked (and if so should we still take what action we can, or run around like headless chickens screaming 'woe is me' at anyone who'll listen).

Personally, I veer between the positions of

'we're probably a bit fucked but must do what we can as early as possible to mitigate the worst potential impacts of the inevitable decline in conventional oil sources'

to

'Oil including unconventional sources should continue to be available at or around current levels for the next few years, before it starts to really fall singificantly, so we must do what we can as early as possible to mitigate the worst potential impacts of the inevitable decline in conventional oil sources.'

One further vital point that often get's missed in this is that oil is just one of many energy sources on which we rely. It is a vitally important energy source and no mistake, but viewing oil as part of the overall energy mix helps to put things into a bit better perspective.

Oil makes up approximately 33-34% of the worlds primary energy supply, so eg a 50% reduction in oil production would lead to around a 16-17% shortfall in the worlds primary energy supply, which is certainly significant, but nowhere near as catastrophic as is implied when people quote the percentage reductions in oil production in isolation.

For comparison, renewables currently make up around 8% of global primary energy production, and at recent rates of increase could well be approaching 16-17% by 2020 or so, and maybe 25-30% by 2030.

Soooo the real questions are what the actual rate of decline in oil production will be, what the starting point will be, how much can be made up from unconventional sources (allowing for the additional energy consumption in the production of those sources), how much can be made up from gas, coal, nuclear, how much can be made up from renewables (allowing for increased consumption during their deployement, but also greater efficiencies when in use), and how much we can increase the efficiency of our use of these energy resources globally without negatively impacting on the economy or living standards.

There are also issues with how much, where and how quickly oil can be substituted for another energy source, as for example, you can't simply plug a petrol car in to the mains, but can potentially replace a petrol car with an electric car, though this process will take far longer to have an impact than if you could simply substitute the fuels for one another.

This is intended as a brief overview of the sources of contention in this and the other threads.

Do you mind if I copy that post? I've been trying to explain this to my dad and a few others but since I don't properly get it myself I've been struggling.

 

[Falcon]

Your continued desire to mock my description of oil supply as presently plateauing is I assume down to the stuff you have said about how much of this oil being produced is from 'unaffordable' fields. But the price of extracting the oil from these fields is not the same as the price of oil. So lets keep the discussion about what oil price messes up the global economy distinct from what price we can afford to pay for extracting oil from a particular field. The two are related, but they are not the same, their relationship is interesting but sometimes for reasons quite opposite to what you are trying to suggest. I'm sure Ill return to this point in the near future as Im not sure I've explained exactly what I mean.

Well, let me explain what I mean, then. The lifting cost of conventional Saudi sweet crude is about $18/bbl. The lifting cost of shale oil and tar sands is north of $90. Note that neither of these lifting costs factor in carbon mitigation costs. If your lifting cost is $90 (set by the operation), and the maximum price is $90 (set by the economy), then there is no margin and therefore no profit with which to fund further investment in depletion replacement (let alone pay the dividend upon which pensions disproportionately depend). In other words, for that fraction of theoretical production capacity which you perceive to be capable of sustaining some sort of plateau (the marginal, high cost stuff), there is no distinction between cost and price. I'm not mocking you.

We are only having this argument because its a long emergency not a quick one, and there is a u75 thread thats been going for 10+ years to prove it.

Excuse me? We need to cut production by 80% today to avoid risks which include, amongst other outcomes, species extinction. In what way is that a "long" emergency?

I don't mean that I am skeptical about climate change itself, but I cannot help but marvel at the timing of when we decided to begin to talk about taking this seriously.

I'll confess, I considered this. In the end, I decided that for this to have merit you would have to believe simultaneously that 95% of the climate change scientific community was either incompetent or morally compromised, *and* that the coalition of oil, coal, automotive and aviation industries funding the millions of dollars worth of counter argument (in which I used to enthusiastically participate) were, in fact, doing so with our long term interests in mind. I decided this was much less likely than the climate instability proposition.

 

[love detective]

(1) supply stagnation -> (2) price rise -> (3) crash-> (4) price fall

Of course the crash caused price to revert. We are interested in why it rose in the first place.

Correlation doesn't prove cause, but logic strongly indicates it. For your theory to be valid, you would need some plausible explanation for why supply stagnated from 2004 despite strongly increasing demand in China, India and Brazil. You would then need to explain why it was not this stagnation that caused the price rise but some other factor, and why it was some irregularity in the financial market that caused the collapse and not the systematic increase in the price of oil/heating/transportation/food.

Your logic is all over the place i'm afraid - for my theory to be valid I do not have to explain anything about oil supply patterns and related price since 2004

My theory is that the crash was caused by capital's desire to extract value in a way that had no base and was not sustainable (i.e. by focusing on extracting value in the sphere of circulation) and like any other crisis in the history of capitalism, crash & crisis intervene to re-stablish value relations at a level where the whole sorry thing can begin again. I've already provided in my post above what the build up in pressure was, what those pressure points were and triggers points that caused the first few ripples that then eventually violently tore through the whole financial system which then caused a financial crisis, an economic crisis, recessions and then a so called sovereign debt crisis

You've ignored (1) and (2).

I ignored (1) & (2) because they are in the main irrelevant to (3)

You've simply asserted that (2) caused (3) and provided no evidence other than a graph which shows that oil prices fell at the time of the crash, which is no evidence for your assertion that (2) caused (3). You seem to think that just because a price rise happened before the crash and a price fall happened after the crash, then this means that the crash was caused by oil prices - there is no logical basis for attributing casual factors to this correlation

Just to add I always find free spirit's posts on energy very valuable, informative and interesting - however on this point I couldn't disagree more with him

 

[SpineyNorman]

Don't have much time to do a proper response to this at the moment but a large part of what made sub prime mortgages just affordable at one point and not affordable at another, is that the majority of these mortgages had introductory offers which means the borrower paid a much lower rate for the first couple of years, making their payments affordable at the time, and with the promise of a booming property market the possibility was there to remortgage of the back of the increasing price to other mortgages which had similar 'teaster' introductory offers.

The reality is that when a lot of these introductory/teaser offers came to an end, the refinancing wasn't possible and homeowners were hit with an effective doubling of their mortgage payments overnight - this started off a rolling pattern of defaults as soon as the teaser period ended. I remember in the autumn of 2007 looking at a graph of US mortgages showing the value of mortgages that were due to have their teaser rates reset over the next 5 years or so and thinking that this was going to be catastrophic - and it was

I don't buy at all this attempt to link the crash to oil prices (correlation doesn't prove cause remember) - i'd say the reverse and that it was the crash that reduced oil prices because of the obvious recessions/depressions that it was soon to provoke/cause

Why do you think people weren't able to re-mortgage? What had changed between them taking out their mortgages and coming to the end of the introductory offers? (Genuine question, I'm not knowledgeable enough in this stuff to have even the faintest clue who's right and who's wrong)

 

[Falcon]

Your logic is all over the place i'm afraid - for my theory to be valid I do not have to explain anything about oil supply patterns and related price since 2004

Why do you think people weren't able to re-mortgage? What had changed between them taking out their mortgages and coming to the end of the introductory offers? (Genuine question, I'm not knowledgeable enough in this stuff to have even the faintest clue who's right and who's wrong)

So the price of oil rose. The (whatever your theory is) happened. Despite the impact of colossal oil price rises on heating costs, cooling costs, energy costs, transportation costs, food costs, and manufacturing costs, and the impact of *that* on the bottom tranche of the mortgage market that couldn't afford to service that cost increase and their mortgage payments triggering defaults which forced the revaluation and destruction of entire classes of synthetic debt, the crash was due (only) to your theory, not the oil price trigger?

OK. So the sensitivity of your theory to oil price, the oil price, the supply/price relationship immediately prior to your theory, the inability of your theory to account for that movement despite the ability of the supply/price relationship to explain the same events, are irrelevant to the merit of your theory? Got it. Sorry for all the logic.

 

[love detective]

Why do you think people weren't able to re-mortgage? What had changed between them taking out their mortgages and coming to the end of the introductory offers? (Genuine question, I'm not knowledgeable enough in this stuff to have even the faintest clue who's right and who's wrong)

a lot of these mortgages were sold on false promises of what could happen when the initial period ended (and in a lot of cases borrowers weren't even made aware that payments would go up afte the two years teaser period) - whether the people selling them the mortgages really believed in what they told them or blatantly lied, it didn't matter for them as they didn't hold onto the risk of the mortgages, they were packaged up and sold on and then bundled into CDO's that were structured in such an alchemist way that the people buying them didn't realise the risks inherent in them.

I think the penny started to drop in 2007 that this alchemy couldn't last as the amount of pressure in the system built up to abnormal levels and things started to unfold from there, these initial triggers started everything rolling and made sure that from early 2008 onwards there was no possibility of these borrowers being able to remortgage whatsoever as house prices were already starting to fall in an iterative cause & effect loop - many of them had taken 100%+ mortgages pushing them into negative equity almost from the get go (as a lot of the mortgages had the monthly payments set so low that the outstanding mortgage balance actually rose each month rather than following)

nothing to do with oil i'm afraid

 

[love detective]

So the price of oil rose. The (whatever your theory is) happened. Despite the impact of colossal oil price rises on heating costs, cooling costs, energy costs, transportation costs, food costs, and manufacturing costs, and the impact of *that* on the bottom tranche of the mortgage market that couldn't afford to service that cost increase and their mortgage payments triggering defaults which forced the revaluation and destruction of entire classes of synthetic debt, the crash was due to your theory, not the price of oil?

OK. Got it. Sorry for all the logic.

the impact of your mortgage payment doubling overnight had a far bigger & violent impact than the gradual and slow build up of food/energy prices over a longer period - remember at this period median, and even at the lower deciles, wages were either stable or still going up in real terms so by definition enough to offset the inflationary impacts of food/energy prices. real wages only started to decline in the last couple of years, so this shows that wages were still high enough to offset the increased costs of food & energy in the run up to the financial crisis - the same cannot be said for the violent & immediate increase in mortgage payments from the old teaser rate of the previous month to the standard rate for the next month

oil prices were not the primary factor of the financial crisis - you may know something about energy but you appear to know very little about anything else