Economic peak oil explained....
 

Peak oil has arrived......??

The Oil Drum | A Brief Economic Explanation of Peak Oil

"For a number of years there has been an arid debate between economists and geologists about Peak Oil. The geologists maintain that Peak Oil (maximal production) is a geological imperative imposed because reserves are finite even if their exact magnitude is not, and cannot be, known.

In contrast many economists maintain prices will resolve any sustained supply shortfalls by providing incentives to develop more expensive sources or substitutes. The more sanguine economists do concede that the adaptation may be slow, uncomfortable and economically disruptive.

The reality, I believe, is that both groups have part of the answer but that Peak Oil is, in fact, a complex but largely an economically driven phenomenon that is caused because the point is reached when: The cost of incremental supply exceeds the price economies can pay without destroying growth at a given point in time. While hard to definitively prove, there is considerable circumstantial evidence that there is an oil price economies cannot afford without severe negative impacts.

The corollary is that if oil prices fall back to and sustain levels that do not inhibit growth, then economic growth will resume, with both recoveries and downturns lagging oil price changes by 1-6 months."

Oil prices and recessions...a NEW recession underway now.....who knew?

Well you know now....:thumbup:

http://www.theoildrum.com/files/graph_3.png


"The conclusion appears to be that:

Unless and until adaptive responses are large and fast enough to constrain the upward trend of oil prices, the primary adaptive response will be periodic economic crashes of a magnitude that depresses oil consumption and oil prices. These have the effect of shifting consumption from incumbent consumers—the advanced economies—to the new consumers in the developing economies.

This is exactly what happened in the last recession when between the start of the recession in January 2007 and its effective end in 1Q 2011 demand rose by 4.3 million b/d in the non-OECD area and fell by 4 million b/d in the OECD area."

meh, the recession never truly ended. it was simply propped up by an artificial money supply aka stimulus. The stimulus was a failure and we are getting back to where the economy would/should be.

People and govts are going to have to get over this growth obsession SOMEDAY- they can do it voluntarily or have nature do it for them. :rolleyes:

This whole concept of "peak" Oil , water , coal or whatever seems fairly pointless to me.

We live on a planet with a limit volume of resources and an increasing population and the sooner we start recognising that and acting accordingly the easier the transition away from oil based fossil fuels will be.

Ecomodders are a part of that ; even if the rest of the driving community isn't.

Peter.

I think the concept of "peak" whatever could and should be useful as a wake-up call, if the majority were conscious enough to comprehend it.

I've been logging the "recession ended" crap under the same file as the "high fructose corn syrup is as good for you as honey" bit.

The amount of recoverable oil left on the planet is not the real issue.

The real issue is our pitiful designs that allow us to continue to waste 80% of the energy content of each gallon of fuel we consume. It's especially pitiful when we have the capability to decrease that waste to 60% fairly easily and in a short period of time. Even as poor as 60% waste would double our average MPG, something demonstrated by many here daily.

While the successful implementation of truly revolutionary vehicle designs seems to be far in the future, the reality is there are many who will resist any dramatic change, out of fear that they would loose their economic security. Such short sightedness is always very harmful, and in the long run the "if man was meant to fly he would have wings" mentality will possibly destroy this planet.

I am not a "Greenatic" by the longest stretch of the imagination you could ever imagine.

I just despise waste.

regards
Mech

What's the difference? :confused:

Debt and growth go hand in hand (debt finances growth and growth covers debt?)...with cheap energy supporting both? Reality (resource depletion) bites and says...enough? (It's a feedback mechanism.) Reactionaries want to keep doing the SOS...trashing the planet and probably enslaving everyone in the process.

A new recession has been called by 2 sources I consider fairly trustworthy...at least 2 sets of indicators say so. Basically it's been a new kind of depression as modified by the Fed? Pattern is similar to the first one...we start to come out of it...then "austerity" measures hit and the party grinds to a halt again? :rolleyes:

I'm neutral on the argument about when / if Peak Oil (or Peak Energy or Peak Resources if you prefer) will or may hit.

I'm not convinced that the current recession is evidence of the continual economic decline often predicted as a result of the Peak, it seems to be more the conventional debt-fuelled investment bubble which has burst, the only difference here seems to be the scale.

We have discussed this previously, and I disagree that the limit has been reached. But (genuine question, not being argumentative) what alternative system would you see being used when/if that happens, or indeed to mitigate for the effects ?

We had "boom and bust" in the era of cheap energy, say between WW2 and the early 1970s. The scale was perhaps smaller but it did happen. The "economic genius" who was our last prime minister said he had got rid of B&B...

We have discussed this previously, and I disagree that the limit has been reached. But (genuine question, not being argumentative) what alternative system would you see being used when/if that happens, or indeed to mitigate for the effects ?


Peak Oil is not about the amounts of oil remianing, but what can be recovered economically. And false ideas of "economy" are bound to fail (no news here; the natural world isn't factored in). The all-around cost is too high (not that it does, or will, matter . . we'll drill till we're dead.)

Instead of your leading question -- and disagreement, Arragonis ("genuine" is disingenous) -- why don't you re-define the problem and re-state what systematic attempts may "work" to clarify things in re this PO thing as you see it? If the question presupposes the answer, then your question is argumentative for it's dependence on definitions (nt provided). Black/white statement made? Line in the sand?

Could you provide those definitions? Or, whom is it you read to assert such? Yergin? Smil? Roubini? Other? From whence have you come? You are genuinely invited to re-state and re-formulate.

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@Slowmover - Maybe my posting was not too clear, I did put some thought into it but I was doing other things at the same time so maybe the wordage got mangled - Apologies if it did. :thumbup:

My question as quoted (to Frank as it goes) was about his comments relating to economic growth as opposed to PO as a specific issue. This has come up before and has descended into arguments. I am interested in what Frank says - I am happy if he PMs me instead of posting here if that helps.

As for PO - I have no idea, I am neutral. It may have happened, it may be happening, it may never happen. I have "heard" of Yergin, Smil & Roubini from books and articles I have read but I would struggle to tell you what they did or said - unless they were the back row for Manchester City in 1985 ? :rolleyes:

As for "From whence have you come?" - I suspect a leading question too, but I'm happy to answer if you can expand on what you want to know ?

Here is the difference;

"greenatic"
VHEMT

Mech
If we are agreed that resources are finite, and that an increasing human population tends to consume these resources at a greater rate, then we can conclude that population will be controlled by available resources.

Population can be controlled by disease, famine, war, natural disaster, or by limiting pregnancy (to name just a few). Most every means of limiting population is generally disagreeable. We have very few options that can be considered more agreeable, and within our control.

Peak oil is a certainty. All tangible things are finite, and consumption of such tangibles must therefore have a peak rate at which it is consumed.

At some point in history there was "peak horses". A point in which the earth used the most horses for transportation, and has since reduced the use of horses for transportation.

Ideally we would transition away from petroleum fueled vehicles in the same way we transitioned away from horses; a more efficient and cheaper alternative becomes available. Otherwise, we might be going back to horses, or turtle horses :turtle:

There isn't one. Being afraid of being "green" is tantamount to being called a dumbocrat. By Bozo.


My question as quoted (to Frank as it goes) was about his comments relating to economic growth as opposed to PO as a specific issue. This has come up before and has descended into arguments. I am interested in what Frank says - I am happy if he PMs me instead of posting here if that helps.

As for PO - I have no idea, I am neutral. It may have happened, it may be happening, it may never happen. I have "heard" of Yergin, Smil & Roubini from books and articles I have read but I would struggle to tell you what they did or said - unless they were the back row for Manchester City in 1985 ?

As for "From whence have you come?" - I suspect a leading question too, but I'm happy to answer if you can expand on what you want to know ?

Well, if you boys are having an argument via PM's then excuse me from stepping in the door late. As you don't read, then I leave you to it.

"Peak Oil" is an accounting. Nothing more. But nothing less.

Every dollar -- every monetary unit -- has an energy debt. Every single transaction. Doesn't matter if the energy was originally human or fossil fuel. What happens if the predictability, the value, of that transaction changes?

From whence have you come is leading . . stick your neck out, son. Define what you are about.

A broken system isn't fixed by "systematic changes". That's the laughable part: No point in patching the tire when there is no longer a road to run down.

So here's a definition, an acronym to look up: E.R.O.E.I.

Start there and see where it takes you. I have a hunch you can have a fair number of decently written books at your disposal in short order. Then you can have some real fun. Stuck in Scotland, land of my hardheaded ancestors, I know you'll not lack for "debates" should you choose to improve yourself thus. It would all depend on what first catches your attention, your interest.

My apologies for the stridency. Call me whatever names you want, if that helps. The dinner table at our house allowed no prisoners taken. Hard to understand why you'd be asking others what you could easily find out for yourself.

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As there is no separation between Peak Oil (as concept, catchall), climate change, the economy, etc; to that end, for the wilfully ignorant, then,

Comics:

What everyones fear is:

John Kinhart, As We Know It

An Introductory Video Series: Richard Heinberg

Part One, Peak Everything

http://www.youtube.com/watch?v=ybRz9...eature=related



Kinhart, again, with what most go through as implications sink in

Rome Didn't Collapse in a Day

Yet further implications; an essay:

Ugo Bardi, Peak Research

Of course none of these are satisfying in the way that a book is. And that one author builds upon another. A few thousand years of Western Civ being flushed since no one will any longer read enough (not enough, at any rate); if one lacks tools, how can one participate as an adult?

So, a review of three. Vanishing Face is worth the effort for the unschooled.

NYRB: James Lovelock, A Great Jump to Disaster



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Good links; I concur.

http://www.startribune.com/world/131954293.html

choice B none of the above
 

so far this thread is nothing but smoke and mirrors , the comments linked above are designed to distract the viewers from what is real.
imho.

consider this ;
your graph does not really show an increase in the price of oil

what it really shows is a
decrease in the value and purchasing power of the dollar
this decrease in value of the dollar is not a "normal" fluctuation in the "market" . and in fact has nothing at all to do with supply and demand of oil .
or anything else , it does not in fact follow an economic model at all .
because the alleged "economic market" fluctuations are skillfully controlled ...


if you wish to learn more, a KISS version, watch what is below

http://www.youtube.com/user/theamericandreamfilm

and if you really want to learn about the subject - watch what is below

http://video.google.com/videoplay?do...56183936&hl=en

Frank, Yes I agree with your post but sadly little evidence is appearing on this side of the equator.

Peter.

Just for balance an alternative view of growth, wealth and population.

I've read Heinberg - I used to follow his blog when I had the time and I find him a very pursuasive and eloquent presenter. I've also read Simmons' book and his blog until he died. I've even read the slightly unhinged Ruppert and I've spent quite a while reading TOD in the past so I get that part. And I've read the arguments against as well from the likes of Matt Ridley.

My question is this. Currently our economic model is based on the idea of growth, making people richer. If our economic model is going to be based on non-growth then what is this other system ? Is it the steady-state economy model, or something else ?

Again, this isn't a leading question. I am neutral on PO and population - I can see merit and flaws in both sides of the argument - I'm interested in how people who view growth as a problem envisage transition. If you like move on from the idea there is a problem to the methods that could be used to solve it. Or is there no solution and we're all going to end up fighting each other for the last crumbs of growth ?

Hopefully I've made it clear I have looked at things I can easily find out, but unless people put their opinions out there its not something I can know. As for dinner table debate, you would be welcome at my table any time - we have good beer too :thumbup:

This is the bit I want to get to know about, are there solutions ?

Its an opinion, and a valid one. :cool:

Quote:

Originally Posted by Rashid bin Saeed Al Maktoum (Click for Wikipedia link) My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel.

My thoughts:
Get rid of Hospitals
Get rid of Healthcare
Get rid of Taxes
Put more into finding another planet to live on
More for Solar powered cars
Stop having wars
Get rid of Obammer.
Then mother nature may get to relax a little.

Learn spelling ? ;)

Sorry I was drunk lol.
*edit*
AM!

High oil prices due to SPECULATION?

Looking For Job Killers? Look at Gas Prices, Study Suggests


"Demand down

The spike in oil prices has not been caused by natural market supply and demand, the study found. In fact, U.S. demand for oil has declined since 2005, while global demand has grown less than 4 percent. In addition, global oil reserves have been growing faster than consumption and the reserve-to consumption (ratio?) now stands at a higher level than it has been in a quarter of a century.

Today, OPEC spare capacity is almost three times as great as it was in 2008.

At the end of 2003 the price of West Texas Intermediate (WTI) crude oil (the “benchmark” for U.S. oil) was a about $30/bbl and the value of outstanding futures contracts (called “open interests”) for WTI was less than less than $20 billion.

Wall Street firms like Goldman Sachs and Morgan Stanley and hundreds of hedge funds led the charge into the oil markets, creating products that “financialized” commodities. Index funds and pension funds soon followed. In July of 2008, when WTI hit its peak price above $140/bbl, the average value of open positions at the peak in 2008 was over $150 billion, the study found.

Eight times as much money chasing the same amount of oil is a prescription for price escalation, CFA said."

The FINAL SOLUTION? :D


Blob Blocker sez:


http://www.nonags.org/members/nijqk/spayed.jpg

Even with a steady population, we still cannot have a growth economy.

Center for the Advancement of the Steady State Economy

By definition, we cannot have a growth economy, since we live on a finite planet.

I don't want to get into a long diatribe before I have to head into work, but in simplest terms, the reason the American economy is screwed up is because of our own values.

American companies (if there truly are any, anymore) only look at the bottom line, so they seek out the cheapest labor force possible. Hence, outsourcing. The American population further supports this because we would rather spend $1 on a foreign-made product than $2 on an American-made product (if you can find one), regardless of the quality.

We've also over-inflated our own wages in many areas, and much of that is due to unions. Now, 50 or more years ago, unions were important. Now there is overlap. We pay unions to do the same things that we pay the government to do. Guaranteed wages and benefits? Government regulated. Workplace safety? OSHA regulated. Especially in the case of American auto workers, if they want to know why the are out of a job, look no further than the UAW.

Now ultimately, in terms of misdirected values, we as a nation have a very big problem. We teach our kids that, in order to be respected, they can only work in a few, select positions. Otherwise, they'll never amount to anything. Doctors, lawyers, engineers, etc. People forget that technicians and artisans are just as important. People forget that art and music are as important to society as science. And the most egregious problem that comes out of this is that our wages are, mostly, dictated by how highly our society ranks our position.

We get our heads straight, people might be surprised at how many of our problems just disappear.

Another alternative view - Just for balance, I don't know if he is right or wrong.

Op-Ed: There's plenty of room for all

I think that's wrong. If American-made products were of better quality, some people would buy them even if the price was higher. The problem - and nothing exemplifies this better than the auto industry - is that all too often, American products give lower quality at a higher price.

I think a good part of this can be traced to a mindset that denigrates technologists as geeks and nerds, so that money that ought to go to R&D instead goes to styling and advertising.

Is this a joke? :confused:

He was pished, keep up at the back ;)

I think the problem is that there aren't really very many American-made products anymore, including cars. Japanese auto manufacturers actually "make" more cars in the United States than "American" auto manufacturers.

My point wasn't just about the quality. Americans aren't buying American goods, and they aren't pressing stores to carry American-made goods. One day, when shopping, I went to three different department stores and was unable to find ANY American-made products. We complain about no jobs and no work, but as a country, we don't actually do anything ourselves.

Which makes them American made, no? Which supports my point that it's the American management mindset that's a big part of the problem.

Why should they? When I buy a product, I care about price/quality (that is, am I getting value for money?), not where it was made.

Don't know who you're calling we, there. From where I stand, it looks as though most of the jobs "lost" to foreign countries would, in the absence of those countries, have been lost to industrial robots. The people who're complaining about job loss out of one side of their mouths will then go and complain about the poor working conditions out of the other, when those conditions are mostly inherent in the job.

And then the US imports tens of thousands of PhD-level research scientists & engineers, because too few Americans are motivated to become educated in those fields.

I too despise waste. So I do what serves me well on a personal level, which is a personal policy of not being wasteful.

And so, I have no guilt about being wasteful. However I don't do so out of "saving the planet", patriotic duty, or any other possible contrived, platitudinous, politically correct reasons that amount to BS that won't really change anything. I do it out of purely economic self-interest.

OTOH, governments (ALL of them, including yours, in no matter whatever country on this planet you happen to live) also act in their own self-interest. That interest is fortified and protected by accumulating as much power and wealth as can be gotten, preferably as rapidly as possible, including from a desirable, marketable commodity (read: oil). Power also flows to established political parties from money given in support to those desiring to be powerful. Votes may be needed as a formality, but votes are bought, either directly through $$$ or through influencing your mind.

So let's give Chairman Mao his due: ultimately, all power grows from the barrel of a gun. A market can also be dominated by an established clique or gang, AKA a cartel (read: OPEC) or a corporation that has reached monopoly status or as being part of a group with mutual interests. Corruption and collusion are actually forms of cooperation, implemented on a collective level, usually by tacit agreement. Again, it is self-interest - but that of a clique.

It is interesting that there is such a sudden and intense promotion of crying out against monetary greed blamed on capitalism and business recently. If you want to see REAL greed and lust for power on a much higher level which transcends any accumulation of monetary assets, think about world politics. All governments have lots of soldiers with lots of weaponry. And every government prints the money in your pocket that you think is somehow "yours".

Maybe we should instead be asking "What is peak politics?" :rolleyes:

I found the numbers hard to believe, and the rest of it as well.

Why do we need an alternative system? All we need to do is understand (for a change) that constant growth and expansion beyond that of population growth is not necessary or desireable.

I cannot fathom that when so many spend so much of their lives standing in line, enduring long commutes, sitting virtually still on clogged roads, trying to find a 7 x 4 space on the beach, etc., that they can't or aren't willing to put 2 and 2 together. :rolleyes: There are these things called limits and finite quantities. Forget about material resources for a moment and just consider all the B.S. we have created for ourselves as far as our living spaces. Do people really truly enjoy the chaos and cacaphony of being packed closely together? Do they prefer that over a bit of space and a bit of quietude? Really? Sure looks that way. Guess I'm the oddball. :rolleyes:

Ha, Ridley . . the belief that technology will save us! It will, at best, "save" some for a little longer than others. But not enough to matter. It is fair to say that the Scientific Revolution and fossil fuel exploitation went hand-in-hand. It's happy talk to posit that the former preceded the latter, however.

Like Daniel Yergin, Petro PR specialist extraordinaire in either The Prize or his latest book. Convenient that numbers cited by him cannot be independently verified. Heinberg may be a publicist/journalist, but we can at least examine the conclusions from their premises.

Here's a blog link on EROEI saved out for that overseas friend depending on his actual or feigned ignorance (since "neutrality" is, ipso facto, something of a falsehood). Since there was stated familiarity, am posting it anyway as the blog covers quite a few related questions in a manner pleasent to send along to the happy-talk folks of my acquaintance (none here, of course; my own notwithstanding :rolleyes:) The biggest hurdle is emotional. That rationality is dragged hither and yon by feelings is discounted -- thus the appeal of Murdoch & Co. -- the curse being that the latter is mistaken for the former in this country. No one, including I, will say it is an easy hurdle.

The Energy Trap | Do the Math

For more context, in .pdf form, Vaclav Smil on Energy Transitions:

OECD Background Notes

And another, from ye olde sod:

The University Times; Irish Student Newspaper

A sustainable economy? Not without food.

How to Double Global Food Production by 2050 and Reduce Environmental Damage: Scientific American

How much "the economy" matter past this is probably regionally-dependent. Some city-states (mega-regions) will be better off than others. Nation states will hollow out: the trappings of nationhood, but unable to deliver. Laws, but respective of persons, not principles.

Back to OP. Is Peak Oil affecting the economy? Ask NATO, the Bundeswehr, Suisse Re and a host of other giant institutions with chips in the game; their reports are sober enough. Definitions of Peak Oil probably matter more than anything else. Affix it as the label on the lid of Pandora's Box.

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...the 'expanding' balloon always eventually "POPS", whether it be rubber, population, debt, empire, or galaxies.

Generally, yes. People are drawn to where things are happening, and things are happening in big cities. Most of the U.S. is wide open space, but the people want the entertainment and salaries afforded by the city. Fortunately this is an efficient arrangement as the wide open spaces can be farmed or preserved while the masses are crammed into a relatively small space.

People demand the highest quality goods at the lowest prices, this in turn forces any competitive company to find the highest quality labor they can for the lowest cost. Often this is found in other countries. This is good because it provides income to people in other countries, we get affordable goods, and the crappy menial jobs are outsourced.

Nobody [still] complains about the enormous amount of lost cotton picking jobs that came about due to advances in machinery. We shouldn't be complaining about any lost job that is due to advances in technology, or offshoring.

If the US is really interested in keeping menial jobs, then we need to get rid of the utterly worthless minimum wage law. I'm always amazed that I live in such a backwards country that would tell someone they cannot work for an amount they are willing to work for. Somehow we think it's better for a work seeker to have no job, along with higher inflation.

As to your art comment, that is entirely subjective. If I had to choose between music and not having to hunt and gather my food, I would forgo the music. This is really comes down to a question of whether form should follow function, or the other way 'round.

Two things: they better stop *****ing about the consequences of congestion, and nothing is going to change until nature says "enough!".