Apocalypse Soon?

[Billy T]

I don't know if the EPA or water demand or rapid fall off of production rate will slow the current large production (now more than million barrels per day) or not. Certainly this new US based energy is a blessing for the US economy and several large energy-intensive plants are being built now or planned; However, some Persian Gulf states can produce at less than half the cost of US's new oil and gas. Some of them have been adding industries to locally use their natural wealth for more than a decade. Natural gas is still flared off in the mid East, called Arab Tears, but plans are to nearly eliminate this waste.

Also they can supply the growing markets in Asia with less shipping cost than the US can, at least until they build a new wider Panama Canal that can pass the huge tankers which are now the most economical for shipping oil and LNG. That may never happen and is at least four decades away before it is operational.

... of the 7.2 billion people in the world. {US's 320 million is less than 5%} It is the billions of people in China, India, Brazil and Africa who are every day fighting to have a higher standard of living that are significantly increasing their oil consumption.

According to the CIA World Factbook, for every 1,000 people in the United States 61 barrels of oil are consumed every day. In China, that number is 7 barrels of oil. In India it is 3 barrels of oil. Those two countries have a combined 2.5 billion people and could double, triple, even quadruple their oil consumption per capita and still not come close to what each person in the United States uses.

The key point from this demand growth is that every year the world needs to add almost one million barrels per day of oil production just to keep up with demand growth from these emerging countries. Last year United States oil production did the unthinkable and increased by one million barrels per day. That incredible accomplishment was entirely wiped out by demand growth elsewhere in the world.

I.e. oil prices will rise, but so will productivity per unit of energy input as it long has been doing, so the burden of energy cost on the economy will probably continue to decrease as it has for decades. As Fraggle correctly points out whenever he can, the huge waste of energy moving bodies to a common work place can still be greatly reduced. Jim Rogers has suggested, and I think there is considerable merit in the idea, that government legislation from DC should cease to exist.* I.e. Congress people remain in their home districts, both so that the people they represent can speak with them and more importantly to make the lobbyist need to go to 455 different locations to give out bribes, etc. instead of only to "Capital Hill" in DC.

* The administrative head quarters would remain in DC, President in the White House, etc. but most already have more local branches.

 

[Futilitist]

Some more breaking news on the current oil spike:

http://www.marketwatch.com/story/oil-prices-top-104-on-sharp-inventory-decline-2013-07-09

Oil surges past $105 as U.S. supplies drop

SAN FRANCISCO (MarketWatch) — Oil futures surged past $105 a barrel on Wednesday after data showed that weekly U.S. supplies dropped by more than twice the amount analysts expected.

Crude oil for August delivery CLQ3 +2.74% jumped $2.31, or 2.2% to $105.84 a barrel on the New York Mercantile Exchange.

Oil hasn’t closed at levels this high since early May 2012.

August Brent oil UK:LCOQ3 +0.48% also rose 66 cents, or 0.6%, to $108.47 a barrel on ICE Futures — levels not seen since April of this year.

Nymex crude futures were trading at just above $105 right before the U.S. Energy Information Administration reported a 9.9 million-barrel decline in crude stockpiles for the week ended July 5. Analysts polled by Platts were looking for a 3.8 million-barrel decline.

The latest decline follows the more than 10 million-barrel drop the EIA reported for the week ended June 28.

The American Petroleum Institute late Tuesday had reported a 9 million-barrel drop for last week.

WTI is currently trading around $106.60 and Brent is trading around $108.40.

WTI is up $13 in less than 3 weeks!

World oil production has been growing only very slowly since 2005. As Billy T just pointed out:

http://seekingalpha.com/article/154...-oil-production?source=email_macro_view&ifp=0

The key point from this demand growth is that every year the world needs to add almost one million barrels per day of oil production just to keep up with demand growth from these emerging countries. Last year United States oil production did the unthinkable and increased by one million barrels per day. That incredible accomplishment was entirely wiped out by demand growth elsewhere in the world.

Perhaps this current oil spike means that demand growth is beginning to exceed production growth. That would be bad.

---Futilitist

 

[Russ_Watters]

...but not apocalyptic.

 

[Billy T]

... Perhaps this current oil spike means that demand growth is beginning to exceed production growth. That would be bad. ---Futilitist

Most think the recent rise is more related to possible closure of the Suez Canal. Production capacity does not significantly change in just three weeks.

Also, IMHO, it would be good, not bad, if oil production limits were causing the price of gasoline in US to become equal to that in Europe. Too rapid release of CO2 (Now at 100s of times higher rate than ever before in a decade) may be very serious. I.e. can not be sure that it will not release CH4, with life time of at least a decade in the atmosphere, and more than 10 times more effective GHG than CO2. That could conceptually make a second positive feedback loop with greater than unity gain. I.e. that may significantly increase the water vapor in the atmosphere and H2O molecules are about 10 time stronger blockers of IR trying to leave the Earth than even CH4 is. I.e. with two strong positive feed back loops operating the ocean surface may boil and shift Earth into its hot stable state - little or no IR from the surface escaping into space and a high pressure steam atmosphere. - A totally sterile Earth.

 

[Futilitist]

...but not apocalyptic.

Not yet, anyway.

If world oil production fails to meet world oil demand, oil prices will rise until the excess demand is destroyed. That means the world economy will just get worse with no way to fix it. Already astronomical debt levels will rise. Once the world is stuck in that situation, a collapse will happen surprisingly fast.

---Futilitist

 

[Futilitist]

Most think the recent rise is more related to possible closure of the Suez Canal. Production capacity does not significantly change in just three weeks.

True, but WTI has been trending upward since July of 2012 and Brent has been trending upward since this April. And the price has been rising in perfect synchrony with the timing of the weekly oil inventory reports, which have had massive shortfalls for the last two weeks. The 10 million barrel shortfall last week was the largest in the last ten years, and this week's 9.9 million barrels shortfall caught traders by surprise again. The $13 rise of WTI in only the last two weeks seems directly related to falling US inventories, not Egypt.

---Futilitist

 

[Russ_Watters]

If world oil production fails to meet world oil demand, oil prices will rise until the excess demand is destroyed. That means the world economy will just get worse with no way to fix it.

No. No matter how hard you push on the brakes of a car, it won't go backwards. Slowly rising supply and its secondary effects of rising prices and limiting demand growth will limit economic growth, but it won't reverse economic growth (make the economy "get worse"). The economy can't be shrinking if oil production is rising.

 

[billvon]

No. No matter how hard you push on the brakes of a car, it won't go backwards. Slowly rising supply and its secondary effects of rising prices and limiting demand growth will limit economic growth, but it won't reverse economic growth (make the economy "get worse"). The economy can't be shrinking if oil production is rising.

That's one of his primary failures in understanding. He thinks economies have all sorts of positive feedbacks built into them; one slip and X fails, which means 2X fails, which means that 4X are out of work, which means that 8X companies close etc etc thus leading to complete collapse. That's the only way his "90-95% die off" thing makes any sense; he thinks that a single factor (oil prices, food prices, debt, whatever) will "shatter" something and cause an irreversible feedback destroying everything.

The opposite is, of course, true, and negative feedback has been why economies always tend to recover despite shortages, shortsighted money management and outright malice from investors and governments. Oil too expensive? Fewer people buy it; demand drops and price come down. Oil too scarce? Price rises; fewer people buy it and supply relative to demand goes up. Natural gas really cheap? Power plants convert to it, natural gas demand goes up, prices rise. Natural gas cheaper than gasoline? Transportation companies convert. Gasoline demand goes down as a result? Gasoline prices drop. They stop converting. Food prices go up? Farmers make millions; more farmers farm more food because they want to become rich, and food supplies increase.

Compare this to Futilitist's imagination. Oil prices go up, but people demand more and more, so they prices go up exponentially while supply dwindles to nothing. No one can drive their cars or harvest their food so the economy collapses. No one can do anything and prices become irrational so everyone starves to death.

 

[Russ_Watters]

Right. If supply and demand formed unstable equilibira, then every price increase would cause a demand crash that destroyed the economy. Instead, perturbations are absorbed by the interplay between supply, demand and price.

Now though this is a pretty basic concept in economics, I don't think he's an idiot, I just think he's desperately clinging to his hypothesis despite the key underlying fact quite literally abandoning him. His idea rested on the fact/prediction that Peak Oil happened in 2006 and any day now we'd start seeing a crash in supply due to the fact that the oil just doesn't exist anymore to increase production. The shutdown of TheOilDrum is a reflection of the fact that most former Peak Oilers recognize that that just isn't happening. So instead of joining them in abandoning PeakOilpocalysm, he's now trying to rewrite the laws of economics to absorb this change in input data.

 

[Futilitist]

No. No matter how hard you push on the brakes of a car, it won't go backwards. Slowly rising supply and its secondary effects of rising prices and limiting demand growth will limit economic growth, but it won't reverse economic growth (make the economy "get worse"). The economy can't be shrinking if oil production is rising.

But the economy can shrink if oil production begins to decline. In fact, it would have to.

World oil production growth has slowed considerably since the 1960s. In those days, oil production grew at a rate of 7.9%. During the 1970s, oil production growth slowed to about 4% (does anybody remember stagflation?). From the early 1908s till 2005, oil production grew at only 1.3%, and that is when the easy credit boom really got under way to make up the difference. Since 2005, oil production has barley been growing at all (please note that latest numbers show that the growth rate since 2005 has improved slightly to around .4%, although that is still pathetically slow by historical standards.). The world economic growth rate has also been flat since 2005.

The progression in the above graph seems pretty obvious to me.

Are you saying that oil production will:

1. Begin increasing at a faster rate soon?

2. Stay level till the end of time?

3. Begin it's logical and inevitable decline at some point?

--Futilitist

 

[Russ_Watters]

...if oil production begins to decline.

That's not what we were discussing. We were talking about what happens when production increases but increases slower than demand increases. You're dodging.

But on the off chance you forgot already, here's what you said:

Perhaps this current oil spike means that demand growth is beginning to exceed production growth.

[separate post]
If world oil production fails to meet world oil demand, oil prices will rise until the excess demand is destroyed.

The first quote says directly "demand growth". The second mentions just the "excess demand" half (meaning demand growing faster than supply).

Are you saying that oil production will:

1. Begin increasing at a faster rate soon?

2. Stay level till the end of time?

3. Begin it's logical and inevitable decline at some point?

You've purposely omitted the predictions experts are actually making, so the mostly likely answer isn't shown there.

 

[Futilitist]

That's not what we were discussing. We were talking about what happens when production increases but increases slower than demand increases. You're dodging.

I am not dodging anything. You and billvon were discussing what happens when production increases but increases slower than demand increases. No one asked me a question, so, by definition I have nothing to dodge.

But more importantly, if oil production is now, or will soon to be, increasing slower than demand increases, then it is logical to ask what happens when world oil production begins it's inevitable decline.

But on the off chance you forgot already, here's what you said:
The first quote says directly "demand growth". The second mentions just the "excess demand" half (meaning demand growing faster than supply).

On the off chance that you forgot already, I was responding directly to this quote by you:

The economy can't be shrinking if oil production is rising.

First off, your statement above is not true. The global economy has actually shrunk since oil production growth slowed to .4% since 2005.

Secondly, I was very naturally extending the conversation to ask the logical question of what happens next. Since oil production growth is currently so anemic, it seems obvious that it will decline soon. Is that incorrect?

You've purposely omitted the predictions experts are actually making, so the mostly likely answer isn't shown there.

You are the one dodging here. If I didn't provide an answer to your liking, why not just answer in your own words.

Most experts would support answer number 3--Oil production will begin it's logical and inevitable decline at some point. Why didn't you choose number 3?

---Futilitist

 

[Write4U]

Apparently some do not understand the exponential function. (70 years = doubling time)

Assuming
a) 1% steady growth, in 70 years we will have consumed more oil than in the entire history of oil use.
b) 2% steady growth, in 35 years we will have consumed more oil than in the entire history of oil use.
c) 3% steady growth, in 24 years we will have consumed more oil than in the entire history of oil use.

Does anyone think we have as much oil as we have ever consumed in the entire history of oil use in reserves? We better come up with a viable long term solution or the apocalypse will be upon us sooner than we think.

This exponential function applies to all growth mathematics and addresses all finite resources. The trick is to exploit unlimited resources such as wind, solar, hydro, (nuclear). It is inescapable, we have absolutely no choice except to start developing those energy sources sooner than later.
Fossil fuels are done, in our lifetimes. Our children will inherit the wind, hopefully they'll be able to use it by then.

 

[Russ_Watters]

I am not dodging anything. You and billvon were discussing what happens when production increases but increases slower than demand increases. No one asked me a question, so, by definition I have nothing to dodge.

Ok, if we we're being pedantic I suppose you made up a question no one asked to respond to when quoting an unrelated statement. Whatever word you want to label it, it is intentionally misleading.

First off, your statement above is not true. The global economy has actually shrunk since oil production growth slowed to .4% since 2005.

That is false. The global economy is larger today than it was in 2005. There was 1 year of recession: 2008-2009: http://data.worldbank.org/indicator/NY.GDP.PCAP.CD?display=graph

Secondly, I was very naturally extending the conversation to ask the logical question of what happens next. Since oil production growth is currently so anemic, it seems obvious that it will decline soon. Is that incorrect?

Yes, both the premise and conclusion are incorrect.

You are the one dodging here. If I didn't provide an answer to your liking, why not just answer in your own words.

We're allowed to do that with multiple choice? Ok, how about: production will continue to increase for several decades and after that is difficult to predict.

Most experts would support answer number 3--Oil production will begin it's logical and inevitable decline at some point. Why didn't you choose number 3?

Because it is too vague and pointless. Most experts would not say such a thing as a sole answer to the question.

 

[Billy T]

... Since oil production growth is currently so anemic, it seems obvious that it will decline soon. Is that incorrect?... ---Futilitist

In Texas, yes:

Now only in Texas >2.4million BPD

 

[Fraggle Rocker]

Does anyone think we have as much oil as we have ever consumed in the entire history of oil use in reserves?

I suppose it's just barely possible. But that wouldn't change the problem, just put it off a little longer. Everyone who's now living hopes that this will happen after they die, so their children will have to solve the problem.

How strange: people used to want their children to have better lives than their own. I guess Americans today don't really love their children. Their nonchalance about just 1) the energy crisis, 2) the infrastructure crisis, and 3) the water crisis illustrates that!

We're in a panic over this stuff, and we don't even have any children. If we were parents we'd be out there busting heads.

 

[Futilitist]

Ok, if we we're being pedantic I suppose you made up a question no one asked to respond to when quoting an unrelated statement. Whatever word you want to label it, it is intentionally misleading.

Whenever I ask a question you find difficult to answer, you accuse me of somehow cheating.

That is false. The global economy is larger today than it was in 2005. There was 1 year of recession: 2008-2009: http://data.worldbank.org/indicator/NY.GDP.PCAP.CD?display=graph

Your link refers to Gross Domestic Product per capita, not World Gross Product. Here is a graph:

Yes, both the premise and conclusion are incorrect.

The premise is that oil is a finite resource. The data clearly shows that oil production has slowed considerably since the 1960s. Production growth used to be very high compared to today. In the 1960s, oil production grew at 7.9% using only conventional technology. Today, the very latest high technology and record spending is yielding only .4% growth. The conclusion is that world oil production will eventually go into decline. That seems very obvious and logical. Why are both the premise and conclusion incorrect?

We're allowed to do that with multiple choice? Ok, how about: production will continue to increase for several decades and after that is difficult to predict.

You are saying that oil production will continue to increase for decades. World oil production is currently growing at a rate of only about .4%. Are you saying that it will continue to grow at this very slow rate for several decades? Won't that tend to result in very slow economic growth for generations to come? What about all that debt? What about all that decaying infrastructure?

Are you saying that oil production will begin to grow at a faster rate? If so, what do you base this on?

Because it is too vague and pointless. Most experts would not say such a thing as a sole answer to the question.

Wrong. Most experts would say that world oil production will begin it's logical and inevitable decline at some point. That is not a controversial point. Can you produce some links to experts who hold your view that oil production will continue to grow for decades?

---Futilitist

 

[Futilitist]

In Texas, yes:

Now only in Texas >2.4million BPD

So what? According to the EIA, US oil production will never again reach it's 1970 peak.

World oil production is currently only growing by a mere .4%, and that growth is completely due to recent production of tight oil from Texas and North Dakota. But the sweet spots have already been drilled. Even the EIA doesn't expect tight oil production to continue to grow past 2020. That means that world oil production can be expected to to enter terminal decline sometime before 2020. With terminal oil production decline comes the end of world economic growth, thus collapse simply cannot be delayed for much longer.

---Futilitist

 

[Futilitist]

I suppose it's just barely possible. But that wouldn't change the problem, just put it off a little longer. Everyone who's now living hopes that this will happen after they die, so their children will have to solve the problem.

How strange: people used to want their children to have better lives than their own. I guess Americans today don't really love their children. Their nonchalance about just 1) the energy crisis, 2) the infrastructure crisis, and 3) the water crisis illustrates that!

We're in a panic over this stuff, and we don't even have any children. If we were parents we'd be out there busting heads.

Who's heads should we bust first? What good would head busting do? You are operating on the premise that a solution to our energy conundrum is possible if only we could all be convinced to do the right thing. But that whole premise is just a false hope. Our civilization has vastly overshot it's resource base, and a collapse and die off are simply inevitable. It is just a question of when, not if.

I do agree that people with children are highly motivated and will likely be among the first to resort to actual, physical head busting in order to obtain food for their offspring when the grocery store shelves are empty.

---Futilitist

 

[Russ_Watters]

Apparently some do not understand the exponential function. (70 years = doubling time)

Assuming
a) 1% steady growth, in 70 years we will have consumed more oil than in the entire history of oil use.
b) 2% steady growth, in 35 years we will have consumed more oil than in the entire history of oil use.
c) 3% steady growth, in 24 years we will have consumed more oil than in the entire history of oil use.

Does anyone think we have as much oil as we have ever consumed in the entire history of oil use in reserves? We better come up with a viable long term solution or the apocalypse will be upon us sooner than we think.

I think you misunderstand what this thread is about. This thread isn't about how many decades we have left before we need to end our dependence on oil. The opening poster predicted that the collapse would be happening by now. He predicted just months ago that collapsing oil supply would be collapsing the world economy to the point where societies would be starting to break down this summer.